Thanks for the replies both.
I've driven it four times since, circa 60 miles in total, and every time the same issue has occured (it definitely seems to be when it shifts down two gears at once, i.e. 4th to 2nd, 5th to 3rd or whatever, it seems to go bad then). After turning the car off and on, it immediately rectifies the issue.
No leaks as far as I can tell. Anyone know where to check the transmission fluid on the E39? Is it a difficult job to check and or replace?
I'll check the codes with my OBD reader tonight. I've only owned the car since Sept 2017 and driven less than 10k miles, in my ownership it's never been checked or changed, but I definitely wouldn't know prior to that as I bought it from an indie garage.
The fact the issue disappears after switching off an on would suggest an electrical issue rather than a mechanical problem with the gearbox, I’d get the battery checked and replaced if necessary - low voltage can and will trigger the “Trans Fail Safe” message / program, my own e38 started doing this prior to me changing the battery - it’s not done it since - otherwise look into changing the fluid in the transmission, it’s not a DIY prospect tbh unless you really know what your doing, look for a specialist who has a Sykes ATF flush machine, it works on the same principle as kidney dialysis but for your automatic transmission, it’ll get 99% of the old fluid out which a conventional pan drop and filter change won’t.
What kills these boxes is firstly BMW’s claim they are “sealed for life” it’s complete marketing rubbish - ZF (who make them) recommend a fluid change every three years(!) and offer it as a service themselves or will point you toward a ZF approved service centre.
Secondly, mixing old fluid with new, the box really does not react well to this so don’t simply top it up.
As I say though firstly check the battery although I’d still get the fluid change done - it’ll cost you ballpark £250 - £300 if it’s done properly - it’ll transform the gear changes and be appealing to future buyers if you can provide evidence it’s been done and done properly.
Edit: To check the fluid level you need to have the car up in the air,garage ramps ideally, it must be LEVEL.
On the side of the gearbox at the rear you will see a plug which takes a hex key.
Start the car up put it in 'N' undo the plug and some fluid should run out - on my e38 which has the same gearbox I’d say about a thimble full dribbled out when I checked it - , if it does then the level is correct if not it needs to be investigated as you most likely have a leak somewhere, this isn’t necessarily serious though as you have to remember your cars 17 years old so it’s quite likely it’s lost relatively little fluid but over a long period of time, if there’s no obvious signs of fluid loss I’d personally not worry about it too much replacing the fluid and filter is by far the best answer and solution and as I say do NOT simply top it up as old and new fluid is not good with these boxes imo.
Once done the gearbox should outlive the car rather than being the reason for its early demise.