2025 presents an opportunity for forward-thinking founders and investors to evaluate how their wealth is structured. Whether considering a business sale, planning a venture, or thinking long-term about protecting capital and succession planning, a structure that supports capital growth, tax efficiency, and flexibility in investment or exit can unlock long-term benefits. Upcoming changes to Business Property Relief for Inheritance Tax in April 2026 adds an extra incentive to act sooner.
A case in point
Take an entrepreneur who has built a successful business through a wholly-owned UK company (the Target). When a private equity house approached with a management buyout offer, the founder agreed to cash out some proceeds and roll the rest into equity in the buyside structure. But, being entrepreneurial, they also saw future opportunities on the horizon and wanted a structure that would facilitate reinvestment, protect value and plan long-term. A personal holding company (PHC) can offer a solution. While this planning is geared at UK-resident entrepreneurs, the PHC could be incorporated offshore to confer beneficial ownership privacy.
How it works
The entrepreneur's shares in the Target are transferred to the PHC in advance of the sale, and the PHC participates in the sale (not the individual). If structured correctly, this reorganisation qualifies for capital gains tax (CGT) share exchange relief on the transfer to the PHC, with the PHC receiving a market value uplift. This uplift crucially resets the base cost of the Target shares ahead of an onward disposal.
The consideration for the transfer can take the form of shares or loan notes issued by the PHC to the entrepreneur. Shares can create long-term liquidity challenges, while loan notes can provide flexibility for capital extraction and taxation under CGT rules rather than income tax. This requires careful handling to avoid unexpected tax charges, but allows the entrepreneur to keep control and flexibility when structured properly.
Indeed, where this structuring occurs more than 12 months before disposal of the Target by the PHC, the disposal may qualify for Substantial Shareholdings Exemption, so no CGT arises.
Planning ahead
HMRC clearance for share exchange relief and anti-avoidance rules is highly recommended to ensure the restructure is viewed as commercial.
Done correctly, a PHC offers control, privacy, optionality, and robust capital protection, so planning is vital.