Business Owners Face Potential Legacy Risks as Wealth Taxes Loom
As anticipation builds ahead of the Autumn Budget on 26 November, UK business owners—particularly those with significant assets—should prepare for far-reaching tax reforms. Treasury sources have suggested that Chancellor Rachel Reeves will ask wealthier households to “contribute more” to help close a substantial gap in public finances.
This is expected to translate into increases or reforms to inheritance, property and investment taxes. A senior Treasury insider stated that the Chancellor “will be fair when asking those to contribute more to rebuild our public services,” while another confirmed that Reeves is ready to make “tough decisions” to safeguard the “stability” of the public finances.
Inheritance Tax: A Direct Threat to Succession Planning
Inheritance tax (IHT) is widely expected to be a central focus of the Budget. Possible changes include:
- A cap on lifetime gifting, which would limit how much individuals can pass on tax-free during their lifetime.
- Scrapping or tightening the seven-year rule, which currently allows gifts to become IHT-exempt if the donor survives seven years.
- Reforms to taper relief, potentially creating a “cliff edge” where gifts made shortly before death could face full taxation.
These changes could significantly disrupt succession planning for family businesses and estates. As Lucy Woodward, partner at Saffery, warns: “This could totally upend many people’s tax and succession planning, not to mention deprive descendants of much needed financial support to help them get on the property ladder [or] fund key life events.”
Business and Agricultural Property Reliefs Under Review
Family-owned enterprises and farms face increased exposure to IHT. The Government is narrowing eligibility for Business Property Relief (BPR) and Agricultural Property Relief (APR)—mechanisms that have historically allowed intergenerational transfers without triggering the 40% IHT rate. These changes could result in higher tax liabilities for family businesses, possibly forcing sales, closures and restructuring.
Capital Gains and Property Taxes in the Crosshairs
The Saltus Wealth Index reveals that nearly 80% of high-net-worth individuals expect Labour to raise taxes within the next year, with capital gains, inheritance, and property taxes seen as the most likely targets.
While Income Tax, VAT, and National Insurance are expected to remain untouched due to manifesto commitments, experts suggest that “technical” tax measures—such as changes to pension tax relief and salary sacrifice schemes—could be used to raise revenue without breaching headline pledges.
What Business Owners Should Do Now
Given the uncertainty and potential scale of reform, business owners and high-net-worth individuals should urgently review their estate and succession plans. Engaging with tax advisers and financial planners now could help mitigate risks and ensure compliance with new rules once they are announced.
As one Treasury source put it, the Chancellor is committed to fairness—but for many business owners, this perception of 'fairness' may come at a significant financial cost.
IFS Cautions Against Tax Hikes Without Overhaul of ‘Unfair’ System
With the November Budget on the horizon, the Institute for Fiscal Studies (IFS) has urged Chancellor Rachel Reeves to avoid “directionless tinkering” and resist “simply hiking rates” without tackling deeper flaws in what it calls an “unfair” and “inefficient” tax system.
The warning comes as speculation grows over possible tax increases to plug gaps in public finances. The IFS cautions that raising taxes without broader reform could be “especially economically harmful," potentially stifling investment and business growth.
Importantly for business owners, the think tank has advised against introducing a permanent wealth tax—highlighting that similar measures have failed internationally. Instead, it suggests that a one-off levy could be a more practical option, as it would be harder for the wealthy to avoid.
To raise revenue more sustainably, the IFS points to several alternatives, including:
- Increasing inheritance tax (IHT)
- Reforming pension tax relief
- Extending the freeze on personal tax thresholds, which could raise around £10.4bn a year from 2029/30
However, extending the threshold freeze could pull more people into higher tax bands through fiscal drag, effectively increasing the tax burden on middle earners and small business directors. The IFS notes that such a move could breach Labour’s election pledge not to raise taxes on “working people.”
Helen Miller, Director of the IFS, summed up the challenge:
“There is an opportunity to be bold and take steps towards a system that does less to impede growth.”
For business owners, the key message is clear: the upcoming Budget could bring targeted tax changes rather than broad rate hikes, but planning ahead for potential adjustments to inheritance tax, pension relief, or income thresholds will be crucial.
Treasury Explores Tax Breaks to Boost Innovation and Productivity
The Treasury is reportedly exploring a package of new tax incentives aimed at spurring innovation and improving productivity, as officials brace for downgraded economic forecasts from the Office for Budget Responsibility (OBR).
Among the measures being considered are reductions in the cost of patenting and an expansion of the Enterprise Management Incentive (EMI) scheme — both designed to support start-ups and fast-growing companies investing in new technology and intellectual property.
Initial Treasury modelling suggests that the proposals could cost just under £1bn but deliver between £6bn and £10bn in productivity gains by the end of the current Parliament.
Liberal Democrat MP Chris Coghlan commented that such measures "could reduce the Chancellor's anticipated £20bn black hole from the OBR's productivity downgrades by 20%."
He added that this would be a "win-win – increasing the value of UK start-ups producing cutting-edge science and incentivising British companies to rapidly bring in innovation to boost productivity."
This could signal a more supportive tax environment for innovation and growth, particularly for companies developing new products, processes, or technologies. If implemented, these measures may offer welcome relief and opportunity for firms looking to invest in R&D or attract and retain top talent.
How Can Qubic Help?
To navigate these potential changes, Qubic offers tailored tax planning services. Our expertise can help mitigate the impact of higher taxes and help you leverage existing reliefs effectively. The window of opportunity to capitalise on existing tax rates and reliefs is narrowing, making now the time to act.
We understand that tax uncertainty can be challenging – and we’re here to help.
For more information on our tax planning services and to discuss your options with one of our team, simply click the link below:
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