Position F — A Founder Election with a Decade Cap

A sixth position on the timing-and-mechanism question. The estate elects, at death, between settlement at death under the existing reform (Regime 1) and a deferred-realisation regime with a hard ten-year backstop (Regime 2). The taxable transfer remains the death event; Position F changes the collection mechanism and timing, not the underlying tax principle. Drafted as the bounded version of Position B — the version that survives the case-against-B in the publication's timing piece. Originally circulated as Position E; relabelled F because the publication already uses Position E for the reform-as-written reference case.

A sixth position on the timing-and-mechanism question. The estate elects, at death, between settlement at death under the existing reform and a deferred-realisation regime with a hard ten-year backstop. The taxable transfer remains the death event; Position F changes the collection mechanism and timing, not the underlying tax principle.

The Longer Look's operational analysis sets out the design positions on the timing-and-mechanism question: implement the reform as written (E, the actual government position and reference case); hold the death-event regime with practical fixes (A); switch to capital gains tax on realisation, Australian-style (B); defer the question pending evidence (C); raise the threshold within the existing mechanism (D). The publication's timing piece presents the underlying mechanisms — death-based and realisation-based — at equal length, without a closing verdict.

The case-against-B in that piece turns on a specific empirical observation: Australia's forty-year experience of CGT-on-realisation for inherited assets has produced indefinite generational deferral, valuation-gaming at the cost-base-setting moment, and a family-trust industry that extends deferral across generations. Those costs are documented and they are real. They are also, crucially, problems of an unbounded realisation regime — not problems intrinsic to realisation-based timing as such.

Position F is the version of B in which those problems are designed out at the front. It is a founder election, not a unilateral switch; the realisation window is bounded; the deferral incentive is removed by a deemed disposal at year ten; the rate is fixed at death; the taxable amount cannot fall below the date-of-death value; the CGT uplift premise is reconciled to the deferral; the anti-avoidance perimeter rules close the structures the Australian regime has had to manage rather than solve. Most of those rules are not new. They are existing concepts from the IHT, CGT, and BPR machinery applied to a new combination.

It is offered here as a sixth position alongside A, B, C, D, E, and F, in the same analytical register the publication uses, with the costs named at full strength.

What Position F is, and what it is not

The proposal is not a CGT regime. The taxable transfer remains the death event. The rate is calculated at death, against the death-date valuation, under the existing IHT framework. What changes is when the calculated tax falls and what it is paid against — proceeds within a ten-year window, with a floor at the death-date value, rather than a notional valuation at death payable through the ten-year instalment plan.

The framing matters because the proposal will otherwise be read as abolishing inheritance tax for founders. It does not. It collects inheritance tax on the same transfer at the same rate against a base that cannot fall below the death-date value. The change is to the collection mechanism and timing, not to the underlying tax principle.

The political problem the proposal is designed to address is narrower and more specific than tax burden in general. It is the forced liquidity event: an estate with concentrated unlisted productive equity facing a tax bill payable in cash that the estate does not have, against a valuation that may bear no relation to any price the shares will ever realise, on a calendar that may force a sale at the worst possible commercial moment. The ten-year interest-free instalment regime in the current reform exists to soften this problem; it does not eliminate it. Position F aligns the tax bill with the cash that pays it, while preserving the death event as the tax-incurring transfer.

The mechanism

On the death of a qualifying shareholder, the personal representatives elect, on behalf of the estate, between two regimes. The election is per-company, not per-estate: the holding in each qualifying unlisted trading company is treated separately, so that a founder who held shares in their operating company and a separate EIS portfolio is not forced into a single regime across both. Within each company, the election applies to the whole holding or none of it.

Regime 1 — settlement at death

The April 2026 reform as written. Fifty per cent relief above the £2.5 million individual / £5 million transferable-couple threshold; effective twenty per cent rate on the excess; ten-year interest-free instalment regime. The estate that wants certainty, a closed file, and known forward cashflow elects this regime.

Regime 2 — settlement on realisation, sell by year ten

The estate elects to defer the inheritance tax charge until the qualifying shares are sold, subject to a hard ten-year backstop. The mechanics:

• Rate. The effective IHT rate that would have applied at death, calculated under the standard SAV process at the date of death and locked at that rate for the duration of the window. The rate does not float.
• Base. The greater of (a) the actual sale proceeds when the shares are sold, or (b) the date-of-death valuation. A heir who realises a loss against the date-of-death value pays the rate against the date-of-death value, not the lower realised value. This floor protects the Treasury against the structural downside risk and prevents Position F from operating as an asymmetric option against the Exchequer.
• Backstop. Deemed disposal at fair market value on the tenth anniversary of death if no qualifying sale has occurred. The deemed disposal triggers the charge and closes the file. Indefinite generational deferral cannot arise.
• Continuing-qualification condition. The company must remain a qualifying unlisted trading company throughout the window. If it ceases to qualify, the charge crystallises on the value at the date of cessation. This is the existing BPR qualifying-company concept applied to a window rather than to a snapshot.
• Connected-party rule. A disposal to a connected party is treated as a deemed disposal at independent valuation. This closes the most obvious gaming route — selling cheap to a family vehicle to cap the tax, then onward at full price. Connected-party rules of this form already exist across UK CGT and IHT legislation.
• Asset-stripping triggers. Significant dividend recapitalisations, asset sales out of the company, or other extractions of value during the window crystallise the charge proportionately on the value extracted, at the date of extraction. The concept is analogous to the existing chargeable-event triggers in IHT trust legislation.
• Exit charge. If the heir ceases UK tax residence during the window, the deferred liability crystallises on the date of departure at then-current valuation. The tax does not leave with the heir. Exit-charge mechanisms already exist for trusts and for the temporary non-residence rules in CGT.
• CGT uplift, deferred. The CGT base-cost uplift to market value, currently applied at death, is itself deferred under Regime 2. The heir's CGT cost base remains the testator's original cost base until the IHT charge crystallises — sale within the window or year-ten deemed disposal — at which point the cost base resets to the value the IHT was charged on. This is the substantive CGT-side fix. It is treated at length below.
• Election timing. The election is made by the personal representatives within the standard IHT account window. It is irrevocable per company.

The CGT uplift question

The interaction with the existing CGT-uplift-at-death rule is the hardest technical issue in the proposal and the one a Treasury reader will identify within a few minutes. It deserves to be set out openly.

Under current UK rules, assets held at death receive a CGT base-cost uplift to date-of-death market value. The heir inherits a fresh cost base. The justification is that inheritance tax has fallen on the same value at death, and applying CGT to the same transfer would double-tax it. The uplift premise depends on IHT having been settled.

Under Position F as drafted naively, IHT is deferred but the CGT uplift would still apply at death. That would create a timing advantage with no principled basis: the heir would receive a fresh CGT cost base before the inheritance tax that justifies the uplift had been settled. The premise of the uplift would have been deferred without the uplift itself being deferred. This is the structural flaw a Treasury reader would attack first, and rightly.

The fix is the matching rule above. Under Regime 2, the CGT uplift is itself deferred. The heir's cost base remains the testator's original cost base until the IHT charge crystallises — either by sale within the window or by deemed disposal at year ten — at which point the cost base resets to the value the IHT was charged on, and ordinary CGT applies thereafter to any further appreciation. The uplift follows the IHT, in the same step, on the same value. The principle is preserved: the heir is not taxed twice on the same transfer, but the uplift does not arrive ahead of the tax that justifies it.

Two alternatives — partial carry-over basis and a sale-time reconciliation between IHT and CGT — were considered and rejected. Partial carry-over preserves the principle problem in attenuated form and adds complexity. Sale-time reconciliation requires the SAV process to engage with both the IHT and CGT computations simultaneously and produces administrative cost without a corresponding gain in legibility. Deferred uplift is the cleanest design and tracks the principle most directly.

The cost of deferred uplift is real and worth naming. The heir is sitting on a contingent CGT liability against the testator's original cost base for up to ten years. Any commercial transaction the heir wants to do with the shares during the window — a partial sale, a buyback, a secondary — runs into the deferred-uplift treatment and the IHT crystallisation rules together. Practitioners will need to model both. This is part of the administrative cost of Position F and is not eliminable.

The case for Position F, on its strongest terms

The valuation problem largely dissolves

The case-for-realisation in the timing piece notes that the SAV process produces multi-year disputes for a meaningful share of cases, consumes significant practitioner time on both sides, and produces values that differ substantially from any later realised value. Under Regime 2 the SAV value at death sets the rate base and the floor, but the substantive tax falls against the actual sale price in the typical case. The disputes that remain are at the floor, not at the headline valuation. Where shares appreciate during the window — the typical case for trading companies that survive a decade — the headline valuation is no longer where the substantive money sits.

The liquidity mismatch dissolves

Under Regime 1 the estate owes tax on a valuation; the ten-year interest-free instalment plan exists precisely because the cash to pay the tax often is not in the estate. Under Regime 2 the tax falls when the cash arrives. Estates that elect Regime 2 do not borrow against the shares, sell at a sub-optimal moment, or run the company through a forced succession to fund the bill. The structural mismatch the instalment regime exists to soften is replaced by alignment. The forced liquidity event the proposal is designed to address is the proximate harm, and Regime 2 prevents it directly.

Pre-death relocation pressure is reduced

Death-event taxation produces stronger pre-death migration pressure than realisation-event taxation; this is uncontested in the practitioner literature, though its empirical magnitude is not measured for the BPR-affected cohort specifically. Position F reduces the pressure: a founder who knows their estate will be able to elect Regime 2 has a weaker reason to relocate before death to avoid an immediate liquidity squeeze. The exit-charge condition prevents the heir from realising a relocation benefit post-death. The relief on pre-death pressure is partial — Regime 1 is still available and the founder may anticipate that the personal representatives will elect it — but the option exists, and that changes the calculation.

Productive-economy alignment without the unbounded-deferral cost

The strongest version of the productive-economy case for B is that forcing a sale at death, or forcing a debt-funded payment of tax against an illiquid asset, destroys value that could have been Treasury revenue at the right moment. Position F preserves this — heirs sell when a sale makes commercial sense within the decade — without the cost the case-against-B in the timing piece names. The Australian pattern of indefinite generational deferral cannot arise. Everything else in the proposal hangs off that single load-bearing claim, and the year-ten deemed disposal is what carries it.

What the proposal returns to founder families

The argument for Position F to this point has been technical and operational: the mechanism is internally coherent, the Treasury is protected by the floor, the deferral-abuse failure mode is closed by the year-ten backstop, the gaming routes are closed by anti-avoidance rules that mostly already exist. That argument stands on its own. There is a third layer beneath it that is worth naming separately, because it changes what the proposal is for and who it is for.

The current reform tells a founder: at the moment of your death, your family faces a problem they cannot plan around, against a valuation they cannot predict, with a cash bill they may not have, on a calendar that may force a sale at the worst possible commercial moment. The founder can plan their own life around this. They cannot plan their family's life around it, because the timing of death is the one variable the founder does not control. The ten-year interest-free instalment regime softens the cash-bill side of the problem; it does not address the timing side. The tax event still falls at death, against a valuation set at death, on a calendar set by death.

What founders are actually leaving the UK over, in many cases, is not the tax itself. The cost of becoming a tax exile in any meaningful sense is substantial — severing UK ties for IHT purposes typically requires at least three years of non-residence, often more, plus careful structuring; the personal cost in dislocation, severed business relationships, family disruption, and the practical loss of operational continuity is large. Founders who leave purely to minimise tax in narrow accounting terms are a smaller subset than the popular framing suggests. The larger subset is founders who have looked at the situation their family will face and concluded that the only thing they can give their children — given that they cannot give them certainty about when they will die — is geographical distance from the regime that creates the problem. The leaving decision, for that cohort, is not a tax-minimisation decision. It is a calculation that the loss of agency for the family at the moment of maximum vulnerability is what the founder cannot bear to leave them with.

Position F gives founder families a different thing. Not lower tax. A decision space at the moment they most need one. Within the constraints set by the floor and the backstop, the family decides when to sell. The Treasury's long-run revenue is preserved — the floor ensures the receipt cannot be lower than under Regime 1, and the year-ten backstop ensures the file closes on a known calendar. Within those constraints, the heirs choose. They can sell on the day the IHT account is filed, taking essentially the same outcome as Regime 1. They can sell six months later when the company hits a milestone that resolves the valuation. They can sell three years later when the company is sold by other shareholders to a strategic acquirer. They can hold to year nine if the commercial logic supports it. What they cannot do is defer indefinitely, manipulate the valuation downwards, or avoid the tax through structuring. The Treasury's position is intact; the family's decision space is restored.

This is what a founder considering staying or leaving has to weigh. Under the current reform: if I stay, my family is exposed at a moment I cannot predict, on a calendar I cannot control, against a valuation that will be contested for years. Under Position F: if I stay, my family has a decision space within a decade, with the Treasury protected against the downside and the deferral routes closed. Those are categorically different propositions. The behavioural prediction is straightforward and not yet measured: founders who would otherwise leave are more likely to stay under the second proposition than under the first. By how much, against what counterfactual, in which sub-cohort, are empirical questions on which the Lords Sub-Committee's January 2026 recommendation that HMRC, DEFRA, and DBT commission seven-year qualitative research on succession-planning effects is the work that would settle the directional case. Until that work exists, the prediction is a directional one, but it is the directional prediction the practitioner literature points toward.

The framing matters because it changes who the proposal sounds like it is for. Not founders trying to avoid tax. Families trying to avoid being trapped at the moment of maximum grief and minimum information. The political weight of those two framings is different, and the second is the one the proposal can defend on its own terms. The technical layer (mechanism coherence, Treasury protection, anti-avoidance perimeter) and the operational layer (valuation-cost reduction, liquidity-mismatch resolution, pre-death-pressure relief) carry the proposal at the level of design. The agency layer carries the proposal at the level of what it returns — which is not money, but the ability of a family to make decisions in their own time, at moments of their own choosing, within a regime that has placed bounds in advance on what the decision space is.

The honest caveat. This argument works most strongly for founders whose families are involved in the company or its succession, or are likely to become involved through inheritance. It works less strongly for founders whose heirs have no commercial relationship to the business and are essentially passive recipients of value. For that population, the agency argument shades toward an argument about deferring tax rather than about preserving family decision-making in a commercial context, and the case-against considerations on horizontal equity bite harder. Most BPR-affected estates are probably the first kind rather than the second — the cohort the reform reaches is concentrated in privately-held trading companies whose succession is itself a commercial question — but the proposal does not pretend the second population does not exist, and a reader weighing the agency argument should hold the distinction in mind.

The position to summarise the agency layer in one line, because a Treasury reader will be the one weighing it: the concession Position F asks for is timing within a decade, against a floor that protects the long-run tax base. Whether the concession is cheap enough relative to the productive-economy harm it addresses is the question the Lords Sub-Committee research would settle. The directional case is that it is.

The case against Position F, on its strongest terms

Treasury cashflow becomes lumpier within each decade

Death-event taxation, even with ten-year instalments, gives HMRC a known forward profile of receipts. Position F means the Exchequer does not know which year of the next decade the receipt arrives in. For each individual estate this is small; aggregated across the affected population (HMRC's December 2025 estimate is approximately 1,100 estates per year), it is a meaningful change to the cashflow shape of a small but visible tax line. Position F is designed to preserve the long-run tax base while changing the timing of collection. A reader who weights fiscal-stability considerations heavily will treat the timing change as a real cost, regardless of the long-run base preservation.

Anti-avoidance perimeter has costs even where the concepts are existing

Most of the anti-avoidance provisions in Regime 2 — connected-party rules, exit charges on departure, deemed disposals, continuing-qualification conditions, asset-stripping triggers — exist in analogous form across UK tax legislation. The proposal is closer to combining existing legislative concepts than to inventing a new regime. That said, applying them to this combination produces interactions that are not present in any existing regime, and a practitioner industry will grow up around optimising the election and the window. This is not unique to Position F; every regime acquires the practitioner industry it deserves. It is a real administrative cost the case-for-A would correctly press on.

The horizontal-equity question

A founder dying with £20 million of qualifying unlisted trading-company shares can elect a deferred-realisation regime. A founder dying with £20 million of cash, listed equities, or property pays IHT at death. The differential treatment is justified within the publication's frame by the differential characteristic — illiquidity, ongoing productive activity, the cluster-effect and capital-recycling mechanisms the frame disclosure names. A reader who rejects that frame, or who weights the IFS / Resolution Foundation horizontal-equity argument heavily, will treat the differential as a problem rather than a feature. This is the principle question, not the timing question, and Position F does not pretend to resolve it.

Administrative inconsistency within the IHT framework

The Commons Library briefing CBP-10181 notes that the April 2026 reform sits within the existing IHT framework precisely because that framework is administratively settled. Position F introduces a second mechanism for one asset class, parallel to but separate from the death-event mechanism that handles every other asset. Estates with mixed assets will have one tax event on one calendar and a second on a different calendar; practitioners will need to maintain expertise in both regimes; the deferred-CGT-uplift treatment adds a further layer. The administrative settledness argument the case-for-A draws on is real, and Position F weakens it.

What would have to be true for Position F to be the right answer

The publication's posture across the five existing positions is that the choice between them depends on empirical questions that are not currently settled. Position F is in the same position. The empirical claims on which the case for it rests are:

• That the valuation costs and liquidity costs of death-event taxation, in the BPR-affected cohort specifically, are large enough to justify the administrative cost of running a parallel regime. The Lords Sub-Committee's January 2026 recommendation that HMRC, DEFRA, and DBT commission seven-year qualitative research on succession-planning effects is the work that would settle this.
• That the pre-death relocation pressure under the current reform is large enough to be worth the administrative cost of a regime that reduces it. The directional case is uncontested; the magnitude is not measured for the affected cohort.
• That the gaming routes that survive the anti-avoidance perimeter are small enough that the realised tax base under Position F is not materially eroded relative to Regime 1. This is an HMRC operational question that can only be answered against draft legislation.
• That Treasury cashflow lumpiness across the decade is acceptable to the OBR's fiscal-forecasting requirements.

A reader who weights these claims as plausibly true on the directional evidence and worth testing through implementation will prefer Position F to Position A. A reader who weights administrative settledness, fiscal-stability requirements, and horizontal equity heavily will prefer Position A to Position F. Both readings are defensible on the available evidence, in the same sense that the publication's existing design positions are.

How Position F relates to A, B, C, D, and E

Position F is not a replacement for any of the five existing positions. It is a sixth option offered into the same analytical space.

• Versus E (reform as written). Position F preserves the reform as written by making it the default: estates that do not elect Regime 2 are in E's world. F adds optionality; it does not remove E.
• Versus A. Position F offers Regime 1 (with the reform's practical-fixes overlay if A is adopted) to any estate that wants it. Estates electing Regime 1 are in Position A's world. F adds optionality; it does not remove A.
• Versus B. Position F is the bounded version of B — the version that survives the case-against-B in the publication's timing piece. The deferral cap, rate-lock at death, the floor at date-of-death value, the deferred CGT uplift, and the anti-avoidance perimeter are the differences.
• Versus C. Position F and C are not exclusive. C with F as the candidate replacement regime is a coherent stance: hold the existing reform while the Lords Sub-Committee research runs, then evaluate whether to introduce F once the cohort-specific evidence exists.
• Versus D. D adjusts the amount; F adjusts the timing. They are independent and could be combined. The CenTax minimum-share and upper-limit alternatives compose with F in the same way.

Conflict of interest, and what this piece is not

The author is a UK technology founder. Personal tax position has been settled by planning that took place independently of which timing-and-mechanism position the policy debate eventually adopts; the outcome of the debate now has minimal effect on the author personally. The author has invested directly and indirectly in hundreds of very-early-stage UK tech companies — the standing this piece is written from on the specific cohort it scopes to.

This piece is not a recommendation that Position F be adopted. It is a presentation of Position F at full strength alongside the costs of adopting it, in the analytical register the publication uses. The publication's posture of not adjudicating between the five existing positions applies to F with the same force.

It is also not a complete piece of legislative drafting. The schedule, the SAV variant procedures for deemed disposals and connected-party valuations, the precise interaction with the existing CGT rules on inherited assets beyond the deferred-uplift principle named above, the trust-law treatment, the EIS interaction, and the wording of each anti-avoidance trigger are all questions for parliamentary counsel and HMRC technical specification. The contribution is the structural proposal, not the statute.

---

A submission to the corrections-and-contributions route at thelongerlook.com. Written in the analytical register the publication uses. Not tax, legal, or financial advice. The author has a personal interest as a UK technology founder.