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Business owners speed up plans to sell amid fears of tax rises in upcoming budget

October 12, 2024

Labour’s non-dom tax reforms could cost the UK £1bn as wealthy individuals leave, warns Oxford Economics, citing concerns over inheritance tax changes and reduced investments.

Growing concerns about tax increases have led nearly 30% of business owners in the UK to accelerate plans to sell their companies, according to new analysis from wealth management firm Evelyn Partners.

The survey, conducted among 500 business owners with turnovers of at least £5 million, found that 29% of respondents had sped up their plans to exit their businesses over the past year, with 23% citing fears of higher capital gains tax as a primary factor.

The findings come as the government continues to hint at tax hikes ahead of the budget on October 30. Labour leader Sir Keir Starmer has also suggested that wealthier individuals and businesses may face a heavier tax burden to help manage the UK’s challenging financial situation.

Laura Hayward, tax partner at Evelyn Partners, said that business owners are increasingly “on edge” due to concerns over potential changes to capital gains tax and inheritance tax. She noted that many entrepreneurs are looking to secure the value of their businesses before any unfavourable tax changes come into effect.

“The business environment for many owners has already been tough enough in recent years as they’ve worked to rebuild after the pandemic amidst cost-of-living pressures and high inflation,” Hayward said. “Now, with the potential for unfavourable tax changes in the upcoming budget, it’s understandable that some are looking to realise the gains of their hard work sooner rather than later.”

The analysis also coincides with a decline in both business and consumer confidence. The Institute of Directors’ economic confidence index fell sharply from -12 in August to -38 in September as business leaders expressed concerns about the tax burden. Additionally, the GfK consumer confidence index dropped from -13 in August to -20 in September, with more people reporting a less optimistic outlook on their personal finances and the economy overall.

As the budget date approaches, businesses are bracing for potential changes, hoping for clarity on how any new tax measures might affect their plans for growth, investment, or selling their businesses.