Autumn Budget - PwC comments on changes to capital gains tax and inheritance tax

Commenting on changes to capital taxes, Alex Henderson, tax partner at PwC, says:

“The Chancellor did not increase CGT and IHT as much as some had feared, however while not exactly a win, there were definitely losers. Those with the smallest farms and businesses will be unaffected but the changes to reliefs from IHT on death will create problems of liquidity for many farmers and business owners; the reason for the 100% relief was the impact on a business of having to fund tax when an owner dies: henceforth for amounts above £1m relief on death will be limited to 50%, leaving tax to pay from the business at a time when it may be affected by the loss of a key employee.

“Looking at the detail of the Budget, the Chancellor has retained the relief on AIM listed shares from IHT which many had feared would be abolished but cut the value in half - an IHT charge of 20% is bound to impact those who valued the previous exemption.”

Christine Cairns, tax partner at PwC, adds:

“While the maintenance of the Business Asset Disposal Relief limit at £1 million will have provided some reassurance at first glance, the graduated rise from the 10% rate of CGT to 14% and 18% over the next two years will mean an increased bill of up to £80,000 for those planning to sell their businesses after April 2025. While this maintains the rate of tax on business sales below the new headline CGT rate of 24%, it’s still a meaningful and painful increase for many, and one that could cause business owners to rethink their plans to sell their businesses in the short term.”