Estate planning for the self-employed usually means treating the business and personal affairs as one picture. Because a sole trader or partner has no separate corporate wall around their trade, business assets, debts and goodwill generally form part of the personal estate on death, alongside the house and savings (gov.uk, as at July 2026, subject to change).
That single point changes the priorities. A will that says who runs or inherits the business, a look at whether Business Relief may apply, and a plan for what happens if you lose capacity all tend to carry more weight than they would for someone employed. This guide sits within our wider estate planning guide and, for the tax detail, our Inheritance Tax Explained guide. Figures are current as at July 2026 and subject to change.
Why estate planning differs when you are self-employed
The main difference is that there is no separate legal entity holding the business. For a sole trader or an individual partner, business assets, tools, stock, receivables and goodwill generally sit inside the personal estate and pass under the will or the intestacy rules like any other asset (gov.uk, as at July 2026, subject to change). Company directors sit in a different position, since shares pass but the company continues.
Three things tend to follow. The business may need someone named to keep it running or wind it down; it may qualify for relief that an ordinary estate does not; and the family may depend on income that stops the day you do. Each is worth planning for separately.
Making a will as a sole trader or partner
A will lets you say who inherits the business and who is trusted to deal with it, rather than leaving it to the intestacy rules. If you die without a will, the law decides who inherits, and an unmarried partner or a business partner does not automatically receive anything (gov.uk, making a will, as at July 2026, subject to change). For a going concern, that gap can stall the trade at the worst moment.
Many self-employed people choose to name executors who can act quickly, and to leave a letter of wishes explaining how the business should be handled. Where a partnership exists, the partnership agreement and any cross-option arrangement usually sit alongside the will, so the documents need to agree with one another. It can be worth discussing the fit with a qualified professional.
Business Relief and inheritance tax
Business Relief can reduce the value of qualifying business assets when inheritance tax is worked out, at either 100% or 50%, provided the deceased generally owned the business or asset for at least two years before death (gov.uk, Business Relief overview, as at July 2026, subject to change). It is a mainstream relief, not a scheme, but it does not cover every business and the rules are changing.
| Rate of Business Relief | Broadly applies to (July 2026) |
|---|---|
| 100% | A business or interest in a business, and shares in an unlisted company, up to the £2.5m allowance for deaths on or after 6 April 2026 |
| 50% | Qualifying business assets above the £2.5m cap; certain listed shares giving voting control; land, buildings or machinery used in the business |
| No relief | Businesses mainly dealing in securities, shares, land or buildings, or in making or holding investments |
Source: gov.uk, what qualifies for Business Relief. From 6 April 2026, 100% relief is capped at £2.5m per estate, with 50% relief above that; unused allowance may transfer between spouses or civil partners. As at July 2026 and subject to change. See our note on IHT for business owners.
Because the £2.5m cap on 100% relief is new and turns on how a business is structured and used, whether any relief applies is rarely obvious. Investment-style businesses often fall outside it altogether. This is one area where it can be worth taking advice from a solicitor, a STEP practitioner or an accountant before assuming a business is covered.