The UK Labour government announced a series of drastic measures in the Autumn Budget 2024, which are likely to affect business owners and buyers alike. In this article, we break down some of the changes, and what they mean for you.
Changes to capital gains tax
One change which will affect business buyers and sellers is the adjustment to rates of capital gains tax. This is the tax you pay when you sell (or ‘dispose of’) an asset that’s increased in value, and it applies to businesses. The tax is applied to the gain you made in the sale, not to the entire price of the sale.
There are two rates of capital gains tax. The lower rate applies to you if you pay the basic rate of income tax, meaning your salary is between £12,571 and £50,270, while the higher rate of CGT applies if you have a salary of more than £50,270. The lower rate of capital gains tax has been increased from 10% to 18%, while the higher rate has been increased from 20% to 24%.
These changes are immediate and apply to any contracts started after 30 October 2024, but any contracts started before that date will use the previous lower rate of capital gains tax.
What does this mean for business owners? If you’re selling your business, it unfortunately means you will pay a higher rate of tax on any gains you make in the sale. However, small business owners may still qualify for relief in the form of Business Asset Disposal Relief.
Am I eligible for Business Asset Disposal Relief?
If you are disposing of your personal business, one you run with a partner, or are a director/employee selling shares in the company you work for, Business Asset Disposal Relief may apply to you.
This tax relief scheme currently provides 10% relief from capital gains tax (meaning if you were paying 20% CGT it would be reduced to 10%). From April 2025, this will be increasing to 14% relief, and then again to 18% in April 2026.
Inheritance Tax changes
The Budget also revealed a series of changes to inheritance tax. Currently, business owners looking to pass their business on have benefitted from 100% Business Property Relief. This has also applied to land owners passing on agricultural property. However, from 6 April 2026, this relief will be reduced to 50% on assets over £1 million. Everything after that will be taxed at the full 40% rate of inheritance tax.
As an example - if you’re the owner of a business worth £5 million and are thinking about passing it on, after April 2026 you would be subject to £800,000 of inheritance tax. This might make it necessary to sell part of the business in order to pay the tax charge.
Changes to inheritance tax should also be factored into your succession planning.
National Insurance and Minimum Wage rise
Two big changes which will affect employers were the increase to employer National Insurance contributions and the National Living Wage.
National Insurance contributions for all employers have risen from 13.8% to 15%, representing a tax rise across the board for the majority of employers. Industries that rely on low-paid staff will also see an increase in staffing costs, as the National Living Wage has risen by 6.7% to £12.21 an hour.
Lower rates for retail, hospitality and leisure
While most businesses are facing tax rises in the wake of the Budget, there was some good news for the retail, hospitality and leisure (RHL) industries. These businesses will have permanently lower business rates multipliers from 2026-2027, and will still have business rates relief up to a £110,000 cap – although this has been lowered from 75% to 40%.
What does it all mean for me?
If you’re a business owner or seller, it’s likely you’re facing an increase in tax payments either now or within the next couple of years. For buyers, there may be opportunities in the agricultural, retail, hospitality and leisure industries, especially if sellers decide to dispose of their assets before tax changes come into effect in 2026.
