At the point of putting pen to paper or in fact fingers to keyboard, we are now 211 days on from the Autumn Budget. I wrote a similar article 138 days after that Budget noting the that the clarity and sense of direction many business owners were desperately seeking was proving elusive and that position still remains. As private client lawyers, we are party to discussions with business owners of all sizes and the issues being considered.
While remaining politically neutral it is fair to say there has been very little or in fact no enthusiasm for the inheritance tax changes made by the Chancellor.
As a brief recap, Business Property Relief (BPR) is an inheritance tax relief that shields qualifying business assets from inheritance tax. This relief has been a valuable tool for business owners and entrepreneurs to pass down trading businesses to the next generation and allow qualifying businesses to continue after the death of the owner. Up to now, this relief had been uncapped but from April 2026, this 100% allowance will be capped at a £1m allowance with businesses assets over £1m receiving a 50% reduction on inheritance rates, which basically means business assets above £1m are taxed at 20% rather than fully escaping tax which had otherwise been the case.
Given this new exposure to inheritance tax, we are certainly seeing business owners ceasing capital expenditure as they prepare for the future tax changes, which coupled by the increased National Insurance Contributions for employers, means plans for growth are being shelved. Cash earmarked for expansion is being ring-fenced to settle any future tax liabilities and some family-owned businesses are looking at exits now, with ownership potentially passing overseas.
Private equity and corporate finance investors are also looking to take ownership of family business as owners rush to exit. From first hand experience, many business owners are fearful of what further changes will come at the next Budget and want out as soon as they can.
There is no doubt these seismic changes to business ownership are causing anxiety and growth is often no longer the focus in some cases.