In light of the recent Autumn Budget, many business owners are assessing how the outlined changes might impact their financial strategy, particularly those considering a business sale. Therefore, we invited Tom Woodcock, tax partner at Hazlewoods, to present his insights into the implications of these policy shifts for succession planning.

Here’s a summary of the primary takeaways for financial planning business owners seeking clarity on the budget’s effect on capital gains tax, inheritance tax, and other vital considerations.

Capital Gains Tax (CGT) Adjustments

The budget brings an incremental increase in CGT rates, though not as drastic as many feared. The basic rate now stands at 18%, with a higher rate of 24%, both of which are below income tax rates, preserving a gap that encourages capital investment. For business owners, this rate adjustment may influence timing decisions around selling their business.

Business Asset Disposal Relief (BADR), which provides a reduced CGT rate on qualifying business assets, saw slight modifications. The rate is set to rise from its current 10% to 14% in April 2025, and then to 18% in 2026. The relief remains valuable, though the rates will gradually increase through to 2026. Business owners should note the anti-forestalling rules that could disqualify the lower rates from applying to unconditional but completed contracts entered into prior to the change in rates if a sale is tax motivated.

Is Now the Right Time to Sell?

With the BADR rate increases coming in phases, business owners face a strategic choice: sell now to take advantage of the current lower rates or risk higher rates in the future. While the phased CGT hikes provide a narrow window of opportunity, the decision to sell should ultimately be based on long-term business goals rather than tax considerations alone.

Inheritance Tax (IHT) – Business Property Relief (BPR)

Business Property Relief, an essential IHT relief for owners of trading businesses, underwent substantial change. From April 2026, 100% relief will apply to qualifying assets of up to £1 million, while assets above this threshold will only be eligible for a reduced rate of IHT relief at 50%. For those planning to transition or sell their businesses, the IHT implications can be significant as BPR relief would be lost following disposal. Owners may need to reassess succession planning strategies, including lifetime gifts and pre-sale adjustments, to maximise available reliefs.

Employers’ National Insurance Contributions (NICs)

An increase in employers’ NICs to 15% means business owners face additional operational costs. However, this increase is tax-deductible, lessening the financial impact. Businesses can still benefit from the employment allowance which is increasing from £5,000 to £10,500 from April 2025 and will now be available to most employers. This will offer some relief to offset this increase, but will be of particularly benefit to smaller employers.

The 2024 Autumn Budget presents a mix of challenges and opportunities for business owners planning an exit. While CGT rate increases and the phased adjustments to BADR introduce new considerations, the overall message is one of stability, with no drastic policy reversals that might disrupt exit strategies. Nevertheless, careful planning and professional guidance remain essential for those navigating these complex changes. By aligning business sale timing with personal financial goals, owners can optimise their returns and position themselves effectively within the evolving tax landscape.

To maximise the benefits from your business sale, it is important to plan your succession strategy as early as possible. If you want to understand what the timeframes around a sale are, especially against the increasing rate for BADR, the first step is to book a market overview with us here.