The reported plan to charge income tax on family business handovers could raise the maximum rate from 24% to 45%, GB News reported on 19 October. The Treasury has still not confirmed it.
GB News says the Treasury is weighing whether owners should pay income tax rather than capital gains tax when passing companies to the next generation through restructures using redeemable shares. It says capital gains tax on such transfers is currently charged at a maximum of 24%.
Its illustration puts the tax on a £1m business handed down this way at up to £450,000, against £240,000 now. Those figures are the two headline rates applied to the full £1m. The 24% figure has not been independently checked.
BM Magazine says the change "could almost double the tax bill on some transfers" and refers to a consultation. It reports that John Endacott, a partner at PKF Francis Clark, said the consultation was "timed to facilitate an autumn Budget announcement" and accused ministers of "taxing them to extinction".
KPMG said it had "significant concerns" that the plans risked "discouraging intergenerational transfers of ownership", BM Magazine reports.
Until the measure appears in the Budget on 28 October or is confirmed by the Treasury, it remains a reported proposal.