IHT relief restrictions and CGT rate increase: the Budget changes business owners fear most

A UK-wide survey* of 500 business owners of firms with turnovers of £5m upwards, conducted on behalf of professional services group Evelyn Partners, reveals that restricting Business Relief which exempts assets from Inheritance Tax (IHT) tops the list of potential changes business owners worry about seeing announced by Rachel Reeves next Wednesday (October 30th). 
 
This was closely followed by fears of removing R&D tax reliefs and an increase in CGT rates (although since the research was conducted the Chancellor has pledged** to maintain R&D tax reliefs at current rates). These areas were more feared than a rise in the minimum wage or a requirement to increase employer pension contributions. 
 
See the table at the end of the press release for the full list of potential policy changes business owners fear most seeing in the Budget.  
 
Toby Tallon, tax Partner at Evelyn Partners commented:  
 
“Business owners are really worried about what next week’s Budget may bring given the growing speculation about potentially seismic tax changes being planned by the Chancellor that could affect their livelihoods. Many fear that all their hard work ploughing time, energy and money into their businesses – often over many years - will count for nothing, and business owners are having to make difficult decisions around starting, growing and exiting businesses. 
 
“The Government has pledged that the headline rates of VAT, income tax and NICs for what it terms ‘working people’ will be frozen in the upcoming Budget, and corporation tax will be capped at 25% for the rest of this parliament. However, it is possible changes to other taxes which the Chancellor has remained silent on that is keeping many business owners awake at night. Removing or restricting business relief for IHT or hiking CGT rates could have a considerable impact on the investment of time, energy, risk and money by business-owners, which in turn could jeopardise economic growth for the UK.   
 
“CGT has historically been charged at lower rates than income tax in order to reward entrepreneurs for the considerable risks they take when founding and growing businesses. Restricting IHT business reliefs may make it more costly to pass businesses on to the next generation which could put the viability of long-standing companies – and the ability to continue employing loyal workforces - at risk if family members of business owners have sizeable inheritance tax bills they need to settle.  
 
“We hope the Chancellor will channel the pledge in the Labour manifesto*** to put pro-business, growth measures at the heart of her maiden Budget to: ‘stop the chaos and support business through a stable policy environment... and give investors the certainty they need to fuel growth.’”

*The research was conducted by Censuswide, among a sample of 500 18+ UK Business Owners (Businesses with a turnover of £5m+). The data was collected between 18.09.2024-02.10.2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.

**UK Investment Summit speech at Guildhall, 14.10.2024

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