Worried about changes to business reliefs? Start planning now

Farmers mobilised quickly after the October budget to protest against proposed changes to agricultural property relief and the rural community is pressing on with its “stop the family farm tax” campaign.

But there has been less of a focus on the impact of the proposed restriction of business property relief (BPR), which stands to have a profound effect on family-owned businesses.

Sir James Dyson has said that “the scrapping of BPR will be even more damaging than the attack on family farms”. To be clear, the government’s proposal is not to scrap either relief entirely — the amount of both is to be halved from 100 per cent to 50 per cent and will apply above a newly introduced £1 million allowance.

But it is telling that Dyson has spoken in these terms given his status as one of the most significant landowners and entrepreneurs in the country.

Businesses may now have to modify investment and growth plans to navigate large potential inheritance tax liabilities. Analysis carried out by the campaign group Family Business UK indicated that the changes to business relief could reduce economic activity by £9.4 billion between 2026-27 and 2029-30, resulting in 125,000 job losses.

Analysis from the news agency Bloomberg also indicates that only 3 per cent of the revenue raised by the changes to employer national insurance will be paid by the largest listed companies. The overall increased tax burden appears to fall heavily on private, family-owned businesses. And there are signs of business sentiment having been shaken as earlier this week the British Chambers of Commerce said that business confidence was at its lowest level since the aftermath of Liz Truss’s mini-budget in 2022.

When you add in pressures such as the increase in minimum wage, inflation, business rate uncertainty, and the further restriction of business asset disposal relief from April 2025 — to name a few — this points to a storm of rising costs and taxes.

That sentiment will not be improved by ongoing uncertainty, which is likely to continue throughout 2025 pending the draft legislation to implement the proposed changes to both reliefs. That could trigger increased corporate mergers and acquisitions, with business owners accelerating their “exits” as the impending tax changes become even more of a key consideration.

For business owners, having the agility to change course to maximise tax and commercial efficiency will be paramount. Structures and foundational documents should be reviewed — articles of association, shareholders’ agreements, family business constitutions and wills. The time for the often “too difficult” conversations about succession is now.

With the changes set to be implemented by April 2026, there may be a narrow window of opportunity for tax and estate planning between now and then.
Iwan Williams is partner at the law firm Michelmores

This post was originally published on here