Anthony Andreasen, tax director at Gosforth-based RMT Accountants & Business Advisors, says: “The growth in the number of businesses becoming Employee Ownership Trusts has been a positive move in terms of succession planning and staff incentivisation, although the tightening of the rules since last year have created more complexities.
“The immediate reduction in the capital gains tax relief on such transactions will make it less of an attractive option for business owners, many of whom will have spent decades investing in and building up their companies, and the hope will be that this change does not have a negative impact in terms of long-term business sustainability.
“The traditional management buyout structure, with more easily-obtained third party funding, could now become a more popular route for succession again.
“The retention of the inheritance tax measures announced in last year’s Budget is disappointing and means that serious issues still remain for farming businesses and other trading companies which they should be moving urgently to address, although the £1m allowance that was made available can at least now be transferred where appropriate.
“The extension of National Insurance and income tax thresholds freeze for a further three years beyond 2028 will bring more people into higher tax bands over time, while the two per cent increase on tax rates on dividends, property and savings income will take a further chunk of individuals’ incomes out of their pockets.”