Debates surrounding Inheritance Tax have reached Glastonbury Festival. Is it time to bring these conversations in the boardroom?
Tax is rarely in the spotlight at Glastonbury, yet against all odds, recent press coverage of the founder of the festival’s succession planning has meant trusts and estate planning has taken centre stage.
In anticipation of the Autumn Budget, Michael Eavis reportedly transferred his shares in the festival’s companies to his daughter and a family trust – a move that could shield the festival from a potential £80 million Inheritance Tax (IHT) liability. While some critics have questioned the optics of such planning, others have praised the decision as a pragmatic step to ensure the legacy of one of the largest music and arts festivals in the world.
This case underscores a broader truth: since the October 2024 Budget, for owner-managed businesses (OMBs), estate planning is no longer a private affair. It’s a strategic and commercial one that arguably belongs in the boardroom.
What’s changed?
IHT is typically payable at 40% on the value of your estate in excess of your nil rate bands. Under current legislation, trading businesses and agricultural property may qualify for 100% Business Property Relief (BPR) or Agricultural Property Relief (APR), rendering them exempt from IHT – provided certain conditions are met.
These reliefs are important for the survival of family businesses, when passing the business down the generations, as otherwise having to fund a tax bill equivalent to up to 40% of the value of your business is a rather tall order, and will most likely pose a significant challenge to succession plans.
From 6 April 2026, however, the landscape on APR and BPR will shift dramatically:
- Relief at the 100% rate will only be available on the first £1m of qualifying APR and BPR assets
- Any value over £1 million will be limited to relief at 50%, meaning IHT will be payable on those assets at an effective rate of 20%.
What does this mean for a business?
Let’s take a step back and appreciate the commercial dilemma Glastonbury would have faced had Eavis not undertaken any planning.
While valuations of Glastonbury vary wildly (from £150 million to £400 million), the implications are clear. Previously, Eavis’ interest would likely have qualified for full BPR. After the changes, only half of that value could be shielded. The press speculates that this would have resulted in an £80 million tax bill.
This difficulty is further compounded by the fact that while independent businesses may have a high valuation for IHT purposes, they are typically illiquid assets. Where there is limited liquidity elsewhere in one’s estate, how will the bill be settled?
For the sake of argument, let us make the assumption that Eavis’ beneficiaries do not easily have access to £80m in liquid assets to fund the IHT due on Glastonbury. This leaves them broadly with two options, both prejudicial to Glastonbury Festival:
Option 1: Sell the business
Selling the business may seem like a straightforward solution, but it comes with its own complications. A sale could jeopardise the festival’s legacy, its charitable commitments and its unique ethos. Moreover, finding a buyer willing to pay a premium while preserving the festival’s legacy would be challenging.
Similarly, a smaller business may be reluctant to compromise their independence by selling part of their equity.
Option 2: The instalment option
Alternatively, the IHT could be settled through a 10-year instalment plan, requiring annual payments of £8 million. This presents a financial challenge, as Glastonbury’s pre-tax profits last January were £5.9 million – resulting in an annual shortfall of over £2 million. Of course, any profits extracted to pay IHT will likely also suffer tax at the point of extraction.
One possible response would be to raise prices; however, this may reduce competitiveness and affect core customers.
This situation reflects the issues faced by many small businesses when managing IHT liabilities through instalment arrangements. Although spreading payments can avoid immediate disruption, the ongoing cash flow demands may limit growth or require price adjustments that could ultimately impact competitiveness.
What can I do for my business?
As Michael Eavis has shown, taking good advice as early as possible is the key to effective estate planning.
IHT is complex but there are options available to limit the impact of these changes. The key takeaway, however, is that IHT planning can no longer be ignored by business owners. Irrespective of your personal attitude to taxation, the tax consequences of your succession planning will affect the health and longevity of your business. It is therefore recommended that you take advice as soon as possible to consider ways to mitigate your liability.
Where should I start?
Quantify your exposure
The first step is to consider how the proposed changes will affect your estate. This provides a clearer picture of potential liabilities.
Take 1 minute to complete our simple IHT calculator to find out how the changes affect you.
Ensure your assets are eligible for BPR or APR
It is worth checking that your business assets qualify for Business Property Relief (BPR) in the first instance. The position is not straightforward, especially for property businesses or businesses with large cash reserves. To ensure it is right, a BPR/APR review should always be undertaken by an appropriately qualified professional.
Revisit your succession planning
In the interest of reducing your future IHT bill, would it be sensible to accelerate succession plans? You could consider gifting assets to your beneficiaries during your lifetime to reduce your IHT over time.
Alternatively, if you are not ready to relinquish control of your business, transferring your assets into a trust may be a suitable option.
Please note that it is important to ensure any gifts you make will not compromise your own financial independence.
Ensure funding is available
Identify cash and liquid assets within your estate. Bearing in mind that these assets are subject to IHT themselves, will the net balance be sufficient to cover the IHT liability on your business?
Update your will
Reviewing your will is perhaps one of the most important steps, but is often overlooked. Ensure your will is aligned with your current estate planning.
How PEM can help
Planning for IHT and its commercial impact can feel overwhelming, but we are here to help. As outlined, the first step is to know your exposure.
If you are a business-owner, we recommend you use our calculator to give you a feel for how you could be impacted.
Please note that this content is not intended to give specific technical advice. It is designed to highlight some of the key issues rather than provide an exhaustive explanation of the topics. Professional advice should always be sought before action is either taken or refrained from as a result of information contained herein.
