For business owners, the latest Budget is another reason to look at long-term plans. Whether the priority is growth, retaining key people, succession or an eventual exit, the question is how those changes affect what you want to achieve.
The Autumn Budget brought further changes for business owners considering the future of their companies. Some affect the tax position on an eventual sale; others could influence employee ownership and succession planning.
Taken alongside changes already in force and others coming in 2027, there is plenty for shareholders and management teams to consider. However, significant business decisions should not be driven by tax changes alone.
For an owner considering the next five or ten years, the starting point is the commercial objective. That might be preparing for a sale, retaining and incentivising key people, stepping back from day-to-day management or beginning to think seriously about who will eventually own and run the business.
Once that is clearer, the tax and legal changes can be considered in that context.
A changing landscape for business owners
From 6 April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) will be reduced from £1 million to £500,000 for qualifying disposals. BADR currently applies an 18% Capital Gains Tax rate to qualifying gains within the lifetime limit, compared with the main 24% higher rate. The change will therefore reduce the maximum potential lifetime tax saving available through the relief from £60,000 to £30,000.
The Government has also announced a new Founders’ Relief. Under the proposals, this would apply a 10% Capital Gains Tax rate to qualifying gains of up to £10 million over an individual’s lifetime, on qualifying share disposals made on or after 6 April 2027.
The proposed conditions are currently the subject of a technical consultation, which closes on 30 November 2026. As they stand, the requirements are demanding and founders should not assume they will qualify. The Government will use responses to finalise the design, with legislation to be introduced in the Finance Bill 2026-27.
For owners who are already contemplating a sale or another transaction, timing is therefore relevant. It should not, however, become the reason for bringing forward a significant commercial decision.
Special rules are also proposed for certain unconditional contracts entered into before 6 April 2027 but not completed by that date. Entering into a contract before April should not therefore be assumed to secure the existing £1 million BADR limit.
For most owners, though, the bigger issue is whether the existing plan for the business still makes commercial sense.
Succession does not necessarily mean selling
For many shareholders, a trade sale will ultimately be the preferred exit, but it is only one option.
A management buyout, new investment, transition to an employee ownership structure or, in a family business, succession to the next generation, may provide alternatives. An owner might also want to step back gradually while retaining an investment in the company.
It is important to think about those options early. A business being prepared for sale will have different priorities from one intending to develop its existing management team to take greater responsibility.
Ownership, leadership and exit are closely connected, but they do not necessarily need to change at the same time.
Investing in future leadership
Ownership is only part of succession planning. The people who will run the business next matter just as much.
For businesses that want to remain independent, retaining those capable of leading the next stage of growth can become increasingly important as founders or existing shareholders begin to step back.
Employee share arrangements can give key people a stake in that future and, in the right circumstances, support a gradual transition in responsibility or ownership.
The 2026 Budget announced further changes to Enterprise Management Incentives (EMI) and Company Share Option Plans (CSOP), taking effect from 6 April 2027. These include increasing the exercise window for EMI options following a disqualifying event from 90 to 180 days, extending the Employee Ownership Trust exception in the EMI rules to companies with arrangements in place to become controlled by an EOT and increasing the individual CSOP option limit from £60,000 to £120,000. CSOP will also be referred to as EMI2.
Not every business will need or qualify for these arrangements. For those that do, thinking about ownership alongside management succession can create more options for the future.
When business and family overlap
For family businesses, these decisions have an added dimension. The company may represent a substantial part of the family’s wealth while also providing employment and income to more than one generation. Decisions about its future can therefore have implications far beyond the boardroom.
The next generation may not all want the same thing. One family member may be ready to lead the business; another may have built a career elsewhere. Equal shareholdings may appear fair but may not necessarily produce the best arrangement for the company or the individuals involved.
This is where corporate and personal planning can start to overlap. Shareholders’ agreements, articles of association, Wills and ownership arrangements may all need to reflect what the family is trying to achieve.
Family circumstances can change too. Marriage, new relationships, births and other significant life events can all affect plans that once seemed straightforward. Pre- and post-nuptial agreements can play a valuable part in that planning, helping couples set out clearly how business interests are intended to be treated and providing greater certainty for the individuals involved, while complementing wider succession and ownership arrangements.
A change in family circumstances can have consequences for ownership, control, other shareholders and employees. Addressing those possibilities before they become an issue can give everyone greater clarity.
Looking beyond the company
The boundary between business and personal wealth can also be blurred for entrepreneurs and significant shareholders.
Since 6 April 2026, a £2.5 million allowance has applied to the combined value of qualifying agricultural and business property receiving 100% Agricultural Property Relief or Business Property Relief. Qualifying relievable property above that allowance generally receives relief at 50%, while any unused amount of the £2.5 million allowance can be transferred to a surviving spouse or civil partner.
For deaths on or after 6 April 2027, most unused pension funds and pension death benefits will also be brought within the value of the deceased person’s estate for inheritance tax purposes.
These changes are particularly relevant to some family businesses, but the considerations are wider than that. An entrepreneur or shareholder whose wealth is concentrated in a company needs to understand how decisions about that company fit with their personal plans.
It does not follow that ownership structures should be changed or assets transferred for tax reasons. Income, financial security, control and the owner’s longer-term intentions all matter.
Planning beyond the Budget
The immediate focus after any Budget is inevitably on tax. The decisions facing business owners tend to have a much longer horizon.
A shareholder planning an exit in a few years’ time may need to start preparing well before then. A company intending to remain independent may need to develop and retain its future leadership. A family-owned business may need honest conversations about whether the next generation wants to take it on at all.
Those are commercial and personal questions as much as tax ones.
That is also why advice may need to extend beyond a single area of law. At Stephens Scown, our Corporate team works with business owners throughout the lifecycle of their companies. Where a commercial decision has implications for personal wealth, succession or family circumstances, our Corporate, Private Client and Family lawyers can work together, alongside a client’s existing financial and tax advisers, so that decisions made in one area take account of the consequences elsewhere.
The Budget may change some of the considerations, but the starting point remains the same: understanding what you want the business to look like in the years ahead and what needs to happen to get there.