The Autumn Budget 2024 and it's effect on Small Businesses

Last week’s Autumn Budget brought some changes, for some more than others. Let's look at the possible effects on small businesses and their owners.

Author

The News Team

30 Oct 2024

Changes to your tax if you sell your business

The Capital Gains Tax (CGT) rate for Business Asset Disposal Relief (BADR), which can apply to disposals by employees and directors of their unlisted businesses, increases from 10 per cent to 14 per cent for disposals made on or after 6 April 2025, and from 14 per cent to 18 per cent for disposals made on or after 6 April 2026.

The CGT rate for Investors' Relief goes up in the same way as BADR but the lifetime limit for the relief reduces from £10 million to £1 million for disposals made on or after 30 October 2024, significantly limiting its financial benefit going forward.

As Mark Twain once said

Death and Taxes – the only two certainties in life.

From 6 April 2026, 20 per cent Inheritance Tax (IHT) will be charged on transfers of qualifying Business Property and Agricultural Property worth more than £1m, a combined cap for both. The new tax will apply on:

The death of a property owner or the recipient as a gift of such property within 7 years or the gift into trust of such property during the lifetime of the owner or the recipient.

We expect this new tax charge to impact owners of trading businesses and agricultural land in the UK, especially those with long-term family ownership focussed on succession over generations. Capping IHT relief will pose financial challenges for these owners, both in managing the tax burden and planning for the future of their long-held enterprises.

Anti-avoidance rules apply to trusts created between 30 October 2024 and 6 April 2026. Each trust will have a £1m allowance but you can’t use multiple trusts just to get around that overall £1m cap.

From 6 April 2026 non-listed investments (e.g. Alternative Investment Market shares) will only attract 50 per cent relief, so will be taxed at 20 per cent from the first £1. And from 6 April 2027, unused pension funds and death benefits payable from a pension also come into the IHT net.

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