Business owners in the UK are worried about the potential inclusion of inheritance tax (IHT) business relief restrictions in the Budget tomorrow (30 October), according to Evelyn Partners.

The firm asked business owners with turnovers of £5m or more which speculated changes in the Budget they would be worried about becoming a reality, with 58 per cent citing concerns about possible restrictions of IHT business relief.

This was closely followed by fears of the Chancellor raising capital gains tax (CGT) rates, with 56 per cent highlighting it as a concern.

More than half (52 per cent) were worried about a potential rise in minimum wage, and 49 per cent were concerned about a possible increase in employer pension contributions.

The Chancellor, Rachel Reeves, will deliver her much-anticipated Budget speech on 30 October, with widespread rumours that she will target IHT reliefs, CGT, and/or employer pension contributions, as she seeks to plug the country’s ‘black hole’ in public finances.

However, Evelyn Partners tax partner, Toby Tallon, warned that business owners were “really worried” about what the Budget may bring amid speculation about “potentially seismic” tax changes being planned.

“Many fear that all their hard work ploughing time, energy and money into their businesses – often over many years - will count for nothing, and business owners are having to make difficult decisions around starting, growing and exiting businesses,” Tallon continued.

“The government has pledged that the headline rates of VAT, income tax and National Insurance contributions for what it terms ‘working people’ will be frozen in the upcoming Budget, and corporation tax will be capped at 25 per cent for the rest of this parliament.

“However, it is possible changes to other taxes which the Chancellor has remained silent on that is keeping many business owners awake at night. Removing or restricting business relief for IHT or hiking CGT rates could have a considerable impact on the investment of time, energy, risk and money by business-owners, which in turn could jeopardise economic growth for the UK.

“CGT has historically been charged at lower rates than income tax in order to reward entrepreneurs for the considerable risks they take when founding and growing businesses.

“Restricting IHT business reliefs may make it more costly to pass businesses on to the next generation which could put the viability of long-standing companies – and the ability to continue employing loyal workforces - at risk if family members of business owners have sizeable inheritance tax bills they need to settle.

“We hope the Chancellor will channel the pledge in the Labour manifesto to put pro-business, growth measures at the heart of her maiden Budget to: ‘Stop the chaos and support business through a stable policy environment... and give investors the certainty they need to fuel growth’.”

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