The Chancellor’s Autumn Budget has introduced significant changes impacting entrepreneurs, investors, and business owners. Key changes in areas such as Capital Gains Tax (CGT), Business Asset Disposal Relief (BADR), and Inheritance Tax (IHT) are likely to influence the timing of future business disposals. Below, Setfords’ Senior Consultant Solicitor, Paul Gilks, breaks down the immediate implications for UK businesses.
Capital Gains Tax (CGT) Adjustment
New Rate Increase to 18% and 24%.
The Chancellor has raised CGT, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%, affecting non-residential properties and other assets with immediate effect. On sales of residential properties, the rates remain the same at 18% and 24%. The change still ensures CGT rates remain competitive in the international context. Business owners should review proposed asset sales as this change may influence decisions on timing of disposals and reinvestment.
Business Asset Disposal Relief (BADR)
To be restricted.
Under the new rules, BADR will remain available to small business owners for gains up to £1 million at a 10% tax rate for this year before rising to 14% on 6 April 2025 and 18% from 6 April 2026.This change will affect owners considering business succession or sales prior to retirement in the next six months.
Inheritance Tax (IHT) and Business Relief
Business Relief £ 1,000,000 Threshold and 20 % relief on AIM stocks.
The existing IHT threshold of £1 million for a married couple passing on a family home is now frozen until 2030. Business Relief is retained but restricted to a £ 1million threshold with a rate of 20% above the threshold on farms and other business assets. IHT relief on AIM-listed stocks has been reduced to 20%. Careful planning is now essential to enable tax-efficient wealth transfers above the £1 million threshold.
Pensions and Retirement Planning
Tax-free lump sum limits are unchanged. Pension pots within estate for IHT purposes.
The tax-free lump sum limits are unchanged, but pension pots are now to be included within a person’s estate for inheritance tax purposes from 2027.
Investment reliefs
Existing reliefs extended to 2035.
The Autumn Budget extends existing EIS ,SCIS and venture capital trust reliefs to 2035. This is aimed at continuing to support the UK as a global leader in spin outs and start-ups.
With the Autumn Budget now public, Setfords’ commercial team is here to support businesses in navigating these changes. For guidance tailored to your specific circumstances, please get in touch to ensure your business remains resilient and prepared for this evolving landscape. As more details emerge, we will share further insights on our social channels.
“The increase in Capital Gains Tax to 18% and 24% is a significant adjustment for UK business owners .The restriction of Business Asset Disposal relief means entrepreneurs and investors should review asset disposal strategies to take advantage of the current beneficial 10% rate until April 2025“
Paul Gilks, Senior Consultant Solicitor (Company, Commercial & Banking)
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