Healey draws up plans for income tax on family business transfers, Telegraph says
The Chancellor is reportedly drawing up plans to charge income tax on family business transfers ahead of the 28 October Budget, in what would be a second blow to family firms after Rachel Reeves cut inheritance tax relief.
Chancellor John Healey is drawing up plans to charge income tax on transfers of family businesses to the next generation ahead of his first Budget on Wednesday 28 October, the Telegraph reported on Sunday — a second heavy blow to family firms.
Transfers of family businesses can currently be structured so they attract capital gains tax, charged at a lower rate, according to Reuters. Retiring owners often convert holdings into “redeemable shares” that the business buys back — attracting CGT of up to 24% for higher-rate payers, the Scottish Sun reports. Under the reported change, that would face income tax of up to 45%, nearly doubling the bill: a family with a £1m firm would pay up to £450,000 to pass it down, against £240,000 under current rules.
There are more than five million family businesses in Britain, supporting around 15 million jobs, the Sun says, citing Government figures. The raid, the Sun notes, would follow Rachel Reeves’s cut to inheritance tax relief — the two measures together are expected to raise £300m a year.
Shadow chancellor Andrew Griffith told the Telegraph the Government was “determined to squeeze every part of the economy, punishing the people who take risks, create jobs and build businesses for future generations”. The Treasury declined to comment on “rumour, speculation or proposals”.
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