What is business succession planning and why is it essential for UK company owners?

Chris Watts – Will Writer, Fern Wills & LPAs

Last verified: 29 August 2025 (England & Wales)

Quick-read summary

If you own a business, planning what happens when you step away — through illness, accident, or death — is essential. Business succession planning ensures your company can carry on, protect its value, and safeguard your family’s interests.

A Business Lasting Power of Attorney (BLPA) lets you appoint trusted people to make decisions if you cannot. Alongside this, your Will and, in some cases, a Business Trust, can make sure your business legacy is secure and your family avoids disputes. 

Without a plan, your business could be left paralysed, bank accounts frozen, and staff uncertain — risking years of hard work. With the right planning, your business can continue smoothly, protecting your employees, your clients, and your loved ones.

Practical checklist

Business owners should consider succession planning if any of these apply:

• ✅ You are a sole director or key shareholder
• ✅ You employ staff who rely on you for decisions and payroll
• ✅ You want family members to inherit or manage the business
• ✅ You have business partners and want clarity if one of you dies or loses capacity
• ✅ You want to avoid disputes between family and co-owners
• ✅ You want to protect the business value for sale, retirement, or inheritance

Key tools include:

1. Business Lasting Power of Attorney (BLPA) – appoints attorneys to run the business if you cannot.
2. Will (with business clauses) – ensures your business interests are properly passed on.
3. Business Trusts – may help with tax planning and long-term family protection.

What to consider

• Separation of personal and business affairs: A BLPA avoids confusion between personal finances and business decisions.
• Will alignment: Your Will must be consistent with your company’s Articles of Association. If they conflict, the Articles take priority.
• Partners and shareholders: Succession planning avoids disputes when multiple owners are involved.
• Tax implications: HMRC offers Business Relief on certain assets, but only with correct structures in place.
• Continuity risk: Without a BLPA, your company bank account may be frozen, contracts left unsigned, and staff unpaid.

How this works in real life

A family plumbing firm left paralysed

Mr Davis ran a successful plumbing business employing six staff. He fell seriously ill, with no BLPA in place. His wife could not access the company account, wages went unpaid, and contracts were cancelled. By the time authority was obtained through the Court of Protection, the business had lost most of its value.

Smooth transition with Fern Wills’ support

Mrs Cole owned a consultancy company. She appointed her co-director as a business attorney under a BLPA and updated her Will to match the company’s Articles. When she suffered a stroke, her attorney kept the business running, clients were reassured, and the firm later sold at full value — providing financial security for her family.

Disputes from clashing documents

Two brothers inherited a retail shop. Their late father’s Will left shares equally, but the Articles of Association gave surviving shareholders first refusal. The mismatch led to a legal dispute, high costs, and a fractured family relationship.

Preserving a family legacy

A local farming family worked with Fern Wills & LPAs to create BLPAs and a Business Trust. When the father died, the business transitioned smoothly to the next generation, with tax relief applied. The farm remained intact, employees kept their jobs, and the family avoided inheritance disputes.

👉 For more on how Wills and Trusts fit into business succession, see our Business Succession Planning in a Will guide.

FAQs

1. What is a Business Lasting Power of Attorney (BLPA)?

A BLPA allows you to appoint people you trust to make decisions about your business if you lose mental capacity. It is separate from your personal financial LPA.

2. Do I need a separate Will for my business?

No — but your Will must clearly deal with your business interests and align with company documents. One properly drafted Will covers both personal and business assets.

3. What happens if I have no BLPA?

If you lose capacity, nobody can legally make business decisions until the Court of Protection appoints a deputy — a process that can take months, during which your business may fail.

4. Can I appoint the same person for my personal and business LPAs?

Yes, but many owners choose different people — for example, a family member for personal finances and a co-director for business decisions.

5. Will my business qualify for inheritance tax relief?

Some businesses may qualify for Business Relief, which reduces IHT by up to 100%, but this depends on the type of business and its structure. Proper planning is essential.

6. Should sole traders worry about succession planning?

Yes. Even small sole trader businesses can suffer disruption without a BLPA, particularly if staff or client contracts rely on you personally.

Optional Technical Notes (for those who want the detail…)

• Companies Act 2006: Directors must act within powers (s.171) and in good faith for the success of the company (s.172). If a director loses capacity, they cannot legally act, leaving a gap in decision-making.
• Articles of Association: These govern how shares are transferred on death. A Will that conflicts with Articles may be overridden. Companies House provides model Articles for limited companies.
• OPG guidance: Confirms you can create a Business Lasting Power of Attorney to cover business affairs separately from a personal LPA.
• Court of Protection delays: Without an LPA, a deputyship application typically takes 6–12 months.
• HMRC Business Relief: Under the Inheritance Tax Act 1984, ss.103–114, qualifying business assets may receive 50% or 100% relief, but not all businesses qualify (e.g. those mainly holding investments or property).

Sources & further reading

• Companies Act 2006
• Office of the Public Guardian – Lasting Power of Attorney guidance
• HMRC – Inheritance Tax: Business Relief
• Companies House – Model Articles of Association

Next steps

If you run a business, don’t leave its future to chance. Whether you’re a sole trader, family-run firm, or limited company director, the right mix of a BLPA, an aligned Will, and — where suitable — a Business Trust will protect your legacy.

Fern Wills & LPAs can help you:

• Draft a Business LPA tailored to your company
• Align your Will with your business documents
• Protect your family and staff from disruption

📞 Get in touch today to discuss the right planning for your business.