The entrepreneurial business owner has taken a real hit in the autumn budget. Aside from the annual increase in employers national insurance, and the anticipated loss of the 10% capital gains tax rate on a sale of shares, entrepreneurial business owners need to radically rethink their exposure to inheritance tax post budget.
The 100% relief from IHT for all shares in trading companies that business owners have enjoyed has now halved for all businesses worth over £1m. Whilst the speech suggested this applied only to AIM shares, unlisted shares in your family-owned training companies also appear to be in scope.
Unless those shares are left to a spouse on death, an effective rate of 20% will now be payable on the entire share value of the businesses value above £1m on death. So a £30 million business could face a £5.8m unexpected tax bill it would be called on by the estate to help fund.
The unexpected passing of a key shareholder could now put significant pressure on the business to be able to fund their death taxes and maintain itself. I would urge business owners to reconsider their wills, key man insurance policies, and shareholders agreements. The measure is set to come into effect from April 2026, so the window to plan is now.
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Throughout the Autumn Budget, our tax experts and industry specialists have been sharing their insights on the measures announced that effect both businesses and private individuals.
Stay updated on the latest developments right here on our dedicated Autumn Budget hub.
