Pass each business to the right person, and keep the family together.

A demerger can split a family company so that each branch of the family, or each child, ends up owning the business they will run. It can also separate investment property from the trade, so the next generation inherits a cleaner structure. Where the conditions are met, the split itself can often be done without immediate tax, which leaves the family free to plan gifts and inheritance afterwards.

Often, yes. A demerger can first put the trade and the property into separate companies. The shares can then be passed to different children, either by lifetime gifts or through your will. Splitting things this way can avoid joint ownership disputes later. Fairness between children, the tax on each gift and the inheritance tax position of each company all need to be considered together.

From 6 April 2026, 100% Business Relief applies to the first £2.5m of combined qualifying business and agricultural property per person, with 50% relief on qualifying value above that. Any unused part of the £2.5m allowance can pass to a surviving spouse or civil partner. A separate £2.5m allowance applies to relievable property held in trusts. This makes the value and structure of each company more important to plan around.

Usually not. Shares don't qualify for Business Relief if the company's business consists wholly or mainly of making or holding investments, which includes letting property. A trading company that holds some investment property can still qualify, but surplus assets not used in the business may be excluded. Separating property can therefore make the Business Relief position of the trading shares clearer, even though the property company is unlikely to qualify.

Not necessarily. Business Relief generally needs the shares to have been owned for two years. Where new shares are treated as the same as your old shares under the capital gains reorganisation rules, the period of owning the old shares counts towards the two years for the new ones. That helps where a demerger is followed by a death or a gift, but each company still has to qualify in its own right.

Business Relief is usually lost once shares are sold for cash, from the date of a binding contract for sale, because cash doesn't qualify. If part of the family wants to sell and part wants to keep going, a demerger before any sale can let those who are keeping their business preserve the relief, while those selling take their own route. The timing of any sale needs careful thought.

A gift of shares is normally treated as a disposal at market value, so a gain can arise even though no money changes hands. Gift holdover relief can be claimed jointly by you and your child for shares in an unlisted trading company, so the gain passes to them instead. The relief can be restricted where the company holds investment assets, which is another reason families separate property first.

Usually the demerger comes first, so each child receives shares in the company they'll own. But the order affects the reliefs. Some demerger conditions look at whether people other than the existing shareholders will gain control afterwards, and gifts planned as part of the same arrangement need to be disclosed and considered. We map out the sequence, including any gifts, before applying for clearance.

Yes, but usually indirectly. A demerger normally divides the company between its existing shareholders, so the children would typically receive shares afterwards by gift or inheritance. In some cases children become shareholders first and then take part in a partition. Either way, the commercial reasons, the effect on control and the inheritance tax position for each generation need to be worked through.

It can. Some families put shares in one of the new companies into a trust, for example to hold value for younger children or to keep control with the parents for a while. Trusts have their own inheritance tax rules, including periodic charges, and the Business Relief allowance for trust property is separate from an individual's. Trusts add complexity, so they're worth considering alongside the demerger rather than after it.

A family investment company is a company used to hold investments for the family, often with parents controlling it and children holding shares carrying value. Some families use one after a demerger, for example to hold the property side or the proceeds of a later sale. It's a separate piece of planning with its own tax treatment, and it isn't suitable for everyone.

That's a classic case for a partition demerger. The family company is divided so each child, or each side of the family, owns their business outright, with no cross-shareholdings. It reduces the risk of future disputes and lets each business make its own decisions. The shares are usually reorganised into separate classes first, so each class can receive shares in a different new company.

It's not compulsory, but it's normally obtained. The capital gains reliefs for reconstructions, the statutory demerger rules and the transactions in securities rules all have anti-avoidance provisions. A clearance application explains the commercial reasons, such as succession and letting each business be managed by the person who will own it, and confirms HMRC's view before any step is taken.

Succession is a genuine commercial reason that HMRC sees often, especially where different family members will run different businesses. What matters is that the reasons are real, documented and consistent with the steps proposed, and that the overall arrangements aren't mainly about avoiding tax. A well-prepared clearance application explains the family background, the businesses and what each person will do.

It often can. Leaving siblings as joint shareholders of a company they don't agree on can lead to deadlock, disputes or a forced sale later. A demerger while you're still involved lets you decide who gets what, with independent valuations and a clear legal structure. It can be done with care for fairness between children, including where one business is worth more than the other.

Well before you want to step back. The two-year ownership periods for Business Relief and Business Asset Disposal Relief, any clawback periods for stamp duty land tax and the time needed for clearance all favour starting early. Planning while you're still in control also gives you the most choice about how the businesses are divided and who runs them.