The first Budget from this government did not pull its punches with most of the tax burden being met by businesses and, ultimately, business owners.
Headline changes to employers' national insurance contributions may seem to be targeted at the employer, but with the passage of time the cost is likely to be passed on to the staff with possible reductions in salary or a change of strategy to hire fewer employees to reduce employment costs.
Businesses may wish to revisit their business structure with employers’ NICs not (currently) being applicable to individuals who are self-employed or to partners in a partnership.
Additionally, the owners of private businesses will personally experience increased levels of tax – both on the disposal of shares in their businesses (with capital gains tax rates for qualifying shares now increasing from 10 per cent to 18 per cent on the first £1m of gain realised after April 6, 2026) and on the value of their business interests being subject to inheritance tax on their death.
From April 6, 2026, only the first £1mn of value on assets such as the unlisted shares in a trading company will be exempt from IHT. Thereafter, IHT will be levied at 20 per cent on any additional value.
This will be very damaging where the shares in the company are the deceased's only asset and is likely to trigger the sale of all or part of long-established family businesses in order to finance the IHT liability.
Aim-listed shares, which were previously exempt from IHT, will now be subject to IHT at 20 per cent.
Further details have been published on the future taxation of non-doms, but as many individuals have already left, or are in the process of leaving the UK, these measures may be less successful than had been intended.
Caroline Le Jeune is a private client tax partner at RSM UK
