Heritage LLP - Protecting Family Wealth Across Generations

What Is a Heritage LLP?

Heritage LLP is our proprietary family partnership structure, designed for families with significant assets who want a single, coherent framework for managing, protecting and transferring wealth across generations. It is built on the Limited Liability Partnership - a robust, well-established UK legal vehicle - and structured around your family's specific circumstances, intentions and long-term objectives.

It is not a will. It is not a trust. It is something more considered than either - and in the right circumstances, more powerful.

A Heritage LLP is a Limited Liability Partnership - a body corporate registered at Companies House under the Limited Liability Partnerships Act 2000 - structured specifically for a family to hold, manage and transfer wealth across generations.

The LLP holds legal title to the family's assets. Family members become partners, with defined capital accounts reflecting their economic interest in those assets. The founding generation retains control through the partnership agreement - which sets out exactly who makes decisions, how income is distributed, when capital can be withdrawn, and what happens in every scenario the family can foresee.

Over time, economic value is transferred to the next generation through carefully managed gifts of partnership interests - each gift structured as a Potentially Exempt Transfer for inheritance tax purposes, falling fully outside the estate after seven years.

Why a Heritage LLP - and Why Now

The UK inheritance tax landscape has changed fundamentally. Three forces are converging to make structured family planning more urgent than at any point in living memory.

Frozen thresholds and rising estates

The inheritance tax nil-rate band has been frozen at £325,000 since 2009 and will remain so until at least 2030. The residence nil-rate band adds a further £175,000 where a home passes to direct descendants - but it tapers away entirely for estates above £2 million. Rising property values and investment growth mean more estates than ever are crossing the threshold at 40%.

The April 2026 Business Property Relief cap

Until April 2026, business owners could pass on qualifying trading assets entirely free of inheritance tax through Business Property Relief. From 6 April 2026, that unlimited relief is capped. Each individual can now shelter up to £2.5 million of qualifying business and agricultural assets at 100% - anything above that is taxed at an effective 20% IHT rate. For a married couple, the combined allowance is £5 million, with spousal transferability of any unused amount.

For a family business worth £5 million owned by a single individual, this creates a £500,000 inheritance tax liability where there was previously none. For a £10 million business, the liability is £1.5 million. The planning window to act is open - but it will not remain so indefinitely.

The April 2027 pension change

From April 2027, unused defined contribution pension funds will be brought within the scope of inheritance tax for the first time. Combined with frozen thresholds and the BPR cap, the cumulative effect for many families is a materially higher IHT exposure than they have ever faced.

How a Heritage LLP Works

Every Heritage LLP is built around a written partnership agreement - the constitutional document that governs how the structure operates. No two agreements are identical, because no two families are. What follows is a description of how the structure typically works in practice.

Step 1 - Establish the LLP

The Heritage LLP is incorporated at Companies House. The founding generation become the initial members and designated partners, responsible for the day-to-day management of the LLP's assets. The partnership agreement is drafted to reflect the family's exact wishes - income distribution, capital allocation, decision-making authority, transfer restrictions, and provisions for every scenario the family anticipates.

Step 2 - Contribute the assets

Assets - property, investment portfolios, business interests, cash - are transferred into the LLP. Each founding member's capital account is credited with the value of the assets they contribute, reflecting their economic interest in the partnership. Existing mortgages and borrowings transfer with the relevant properties.

Provided the LLP is structured correctly, the contribution of assets is typically treated as a non-event for Capital Gains Tax and Stamp Duty Land Tax purposes, under established HMRC practice going back to Statement of Practice D12.

Step 3 - Introduce the next generation

Children or other intended beneficiaries join the LLP as members, initially with nominal capital accounts. Over time, the founding generation gifts portions of their capital account interests to the next generation - either outright or via a debt note arrangement that preserves liquidity. Each gift is structured as a Potentially Exempt Transfer: if the donor survives seven years, the gift falls fully outside their estate.

Step 4 - The founding generation retains control

The partnership agreement ensures that the transfer of economic value does not mean the transfer of control. Designated partner status, decision-making clauses, income allocation provisions and transfer restrictions all remain in the hands of the founders until they choose to pass them on. The next generation benefits economically while the current generation remains in charge operationally.

Step 5 - The structure endures

Because the LLP is a legal entity in its own right, it continues to exist independently of the life of any individual member. On the death of a founding member, their partnership interest passes in accordance with their will - there is no freeze of business accounts, no forced sale of assets, no probate delay that interrupts the running of the family's affairs. The heritage continues.

Who Heritage LLP Is Designed For

Heritage LLP is not the right solution for every family. It is a sophisticated structure that rewards careful planning and works best for families with significant, mixed assets and a genuine multi-generational intention.

Families with significant property and investment portfolios

For families whose wealth is held in buy-to-let property, commercial property, listed investments or a combination of these, a Heritage LLP provides a single governance framework - with bespoke income allocation, controlled gifting and a clear succession plan - that personal ownership cannot replicate.

Business owners affected by the April 2026 BPR cap

If your trading business is worth more than £2.5 million and you were relying on Business Property Relief to pass it on free of inheritance tax, the April 2026 changes have fundamentally altered your position. A Heritage LLP allows you to begin transferring economic value to your children now - through gifts of partnership interests structured as PETs - while retaining operational control for as long as you choose.

High net worth individuals with international assets

From April 2025, UK inheritance tax follows residence rather than domicile. Individuals who have been UK-resident for ten of the past twenty years are now subject to IHT on their worldwide assets, with an IHT tail of up to ten years after departure. For internationally mobile families, a Heritage LLP - which is recognised in most major jurisdictions and offers tax transparency across borders - provides a durable, coherent structure for assets held in multiple countries.

Families with complex dynamics

Blended families, second marriages, children from multiple relationships, beneficiaries with vulnerabilities, estranged relatives - every family has complexities. A Heritage LLP addresses them through the partnership agreement, which can provide with absolute precision for who receives what, when and on what conditions. It can include transfer restrictions that prevent an outsider from becoming a partner, pre-emption rights that keep the structure within the family, and forced-buyout provisions in the event of bankruptcy or divorce.

Heritage LLP vs Trust vs Family Investment Company

Three structures dominate sophisticated UK estate planning: the Family LLP, the Discretionary Trust and the Family Investment Company. Each has its place. Understanding the differences is essential to making the right choice.

For most families, the Heritage LLP is most appropriate where the primary objective is to transfer economic value efficiently while retaining income flow and operational control. Where long-term accumulation inside a tax-efficient wrapper is the priority, a Family Investment Company may be more suitable. Where the beneficiaries include minor children, unborn grandchildren or vulnerable adults, a Discretionary Trust - or a hybrid structure combining elements of more than one vehicle - may be the answer.

We will always tell you honestly which structure is right for your circumstances, even if that is not the Heritage LLP. Our interest is in giving you the right advice, not in selling a particular product.

Tax Efficiency - How a Heritage LLP Works

Inheritance Tax - Potentially Exempt Transfers

The principal mechanism for reducing IHT through a Heritage LLP is the gift of capital account interests to the next generation, structured as Potentially Exempt Transfers. A PET is a gift that carries no immediate IHT charge. If the donor survives for seven years, the gift falls entirely outside the estate. If the donor dies within three years, the gift is fully chargeable. Between years three and seven, taper relief reduces the IHT on the gift progressively.

Unlike a transfer into a discretionary trust, there is no 20% lifetime IHT charge on the value of the gift at the point of transfer. This makes the Heritage LLP significantly more efficient for transferring large values - particularly relevant in the post-2026 environment where BPR no longer shelters business assets above £2.5 million.

Business Property Relief - what still applies

Where the Heritage LLP carries on a qualifying trading business, Business Property Relief is available on the value of each member's partnership interest - subject to the new £2.5 million per-person 100% relief cap introduced in April 2026. Above the cap, the effective IHT rate is 20%, with a 10-year interest-free instalment option for payment.

It is important to understand that a Heritage LLP used primarily for investment assets - property held for rental income, portfolios of listed shares - will not typically qualify for Business Property Relief. The IHT efficiency in an investment LLP comes from the gifting mechanism, not from BPR. We will be clear with you about which applies to your situation.

Income Tax - transparency

The Heritage LLP is tax-transparent. Each member is taxed personally on their share of the LLP's income, in proportion to their capital account and income-sharing arrangements, at their individual income tax rates. This allows income to be allocated to family members in lower tax bands - children who are adult taxpayers at basic rate, a spouse with unused personal allowance - subject to HMRC's anti-avoidance rules around income splitting.

Capital Gains Tax and Stamp Duty Land Tax on contribution

The contribution of assets to the Heritage LLP is typically structured to fall outside the scope of Capital Gains Tax and Stamp Duty Land Tax, under established HMRC guidance. This is not guaranteed in all circumstances - the position depends on the specific assets, the structure of the LLP and the members involved - and we will always confirm the tax position in writing before any assets are transferred.

What a Heritage LLP Cannot Do

We believe in honest advice. A Heritage LLP is a powerful tool - but it is not a solution to every problem, and there are things it cannot do.

• It cannot immediately remove assets from your estate. Gifts of partnership interests are PETs - they require seven years to fall fully outside the estate.
• It is not suitable for families whose primary asset is a trading business worth less than £2.5 million and fully covered by the BPR allowance - the simpler approach of holding the business personally and claiming BPR may be more efficient.
• It does not offer the same privacy as a trust. The LLP must file annual accounts and a confirmation statement at Companies House, including details of members and capital balances.
• It requires at least two members at all times. If membership falls to one person for more than six months, the limited liability protection is lost.
• It cannot protect against a determined Court of Protection or financial-remedy application in divorce proceedings - though the partnership agreement's transfer restrictions provide meaningful protection in most cases.

We will always discuss these limitations openly with you and ensure that a Heritage LLP is the right choice before any work begins.

Heritage LLP and International Estates

For families with assets in multiple jurisdictions - property abroad, offshore investments, pension wealth in foreign schemes, foreign business interests - the Heritage LLP provides a single, durable UK structure that is recognised in most major treaty jurisdictions.

From April 2025, the UK's IHT regime is residence-based rather than domicile-based. Any individual who has been UK-resident for ten of the past twenty years is now subject to IHT on their worldwide assets, with a ten-year IHT tail after departure. This is one of the most significant changes to UK IHT in a generation, and it affects thousands of internationally mobile families who previously believed their non-UK assets were outside the IHT net.

A Heritage LLP, carefully structured with genuine UK substance, can provide a coherent framework for managing cross-border wealth - with the income transparency that international families typically need and the succession clarity that estate planning across borders demands.

For estates with significant complexity across multiple jurisdictions, we work with specialist international counsel to ensure the structure is properly co-ordinated with the laws of each relevant country.

Our Approach

Every Heritage LLP we establish begins with a conversation. We listen carefully to your circumstances - your assets, your family, your intentions, your concerns - before we recommend anything.

If a Heritage LLP is the right solution, we will explain exactly how it will work, what it will cost, what ongoing obligations it creates, and what the tax position is at every stage. We produce a written recommendation before any work begins, and we agree a fixed fee in advance. There are no hourly rates, no unexpected charges.

We work from our offices in Bolton Street, Mayfair, London and Bournemouth, Dorset. Most of our Heritage LLP work is conducted by telephone and video - the initial consultation, the drafting process and the ongoing review - with in-person meetings at either office where clients prefer.

The founding generation that establishes a Heritage LLP typically works with us over several years as the structure evolves, the gifting programme progresses and circumstances change. We remain available throughout - for annual reviews, for life changes, for the questions that arise as the next generation becomes more involved.