3 Mins
How will the Autumn Budget 2024 impact tax, pensions, and business succession?
Our Corporate Finance and Tax teams (Dawn MacDougall, Lucy Crow, Bradley Johnston, Rod Mathers & David Cayzer) break down the key changes and what they mean for business owners and individuals.
Topics covered in the webinar:
- Proposed Inheritance Tax (IHT) changes and planning strategies
- Proactive steps businesses can take ahead of these changes
- The growing importance of professional business valuations
- Preparing for business sales and managing IHT-related borrowing
Recorded on Wednesday 26th February 2025
Summary & Key Takeaways
The webinar centres around the significant changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT) announced in the Autumn Budget 2024, and how these changes will impact business owners and individuals.
Key Changes and Implications
- Inheritance Tax (IHT) Reform (April 2026):
- The 100% Business Property Relief (BPR), which allowed many businesses to pass on without IHT, is being limited.
- After April 2026, only the first £1 million of business value will qualify for 100% relief. The rest will get 50% relief.
- This means many businesses will face substantial IHT liabilities, requiring careful planning.
- Valuations of businesses will become far more important to have and to be accurate.
- This £1 million limit is per person, and cannot be transferred between married couples.
- Capital Gains Tax (CGT) Adjustments:
- CGT rates have increased, affecting the taxation of asset sales, including businesses.
- Business Asset Disposal Relief (formerly Entrepreneur’s Relief) tax rates are also set to rise.
- This means that selling a business will become more expensive from a tax perspective.
Essential Takeaways for Businesses and Individuals
- Proactive Succession Planning is Critical:
- Businesses need to start planning now to mitigate the impact of these changes.
- This includes reviewing existing succession plans and considering alternative strategies.
- Accurate Business Valuations Are Paramount:
- With the changes to BPR, having a robust and defensible business valuation is crucial.
- This will help determine IHT liabilities and support claims for relief.
- Funding IHT Liabilities Requires Careful Consideration:
- Businesses and individuals need to explore various options for funding potential IHT bills.
- This includes:
- Extracting cash from the business (with tax implications).
- Utilising IHT instalment plans.
- Considering life insurance policies.
- Company purchase of own shares.
- The declaration of dividends is the most expensive way to extract cash from a company.
- Understanding CGT Implications is Vital:
- Businesses need to be aware of the increased CGT rates and how they will affect asset sales.
- Maximising the use of available reliefs, such as Business Asset Disposal Relief, is essential.
- Seek Professional Advice:
- The complexities of these tax changes necessitate expert guidance from tax and financial advisors.
- They can help businesses and individuals navigate the changes and develop effective strategies.
- Many different sales options:
- There are many different ways to sell a business. These include trade sales, selling to private equity, management buy outs, selling to an employee ownership trust, and others. Each has different tax implications.
- Funding options:
- There are debt funding options and equity funding options. Each have different positives and negatives.
Final Recommendations
The webinar highlights the urgent need for businesses and individuals to prepare for the upcoming tax changes. By prioritising succession planning, obtaining accurate valuations, and seeking professional advice, they can minimise their tax liabilities and ensure a smooth transition of assets.
Contact us
If you would like to discuss your business’s circumstances with a member of our team, please get in touch with us via the form below and we will get back to you soon.