Are Family Businesses Suffering More Than Most From The Budget Tax Changes?

The autumn Budget by Chancellor Rachel Reeves certainly caused a stir the other week with some sweeping changes, not least the possible inheritance tax bill for farmers who get their farm passed down to them from the previous generation.

Janette Burns, who is chair of Chartered Accountants Ireland’s Northern Ireland Tax committee, has come out with some strong words against the tax changes. She believes that increasing employment costs, allied to higher Capital Gains Tax and the new Inheritance Tax bill will bring many family businesses in Northern Ireland to the brink.

Family Owned Businesses The Heartbeat Of The Economy

Here is what she has said in an article on the Belfast Newsletter website:

“Northern Ireland family-owned businesses are the heartbeat of our economy with around 80% of businesses here either family owned or managed. Many of these businesses, particularly those who employ minimum wage workers, will face a stark increase in their wage bill from April 2025 as a result of the changes to Employer’s National Insurance Contributions and the National Minimum Wage.

“For example, a business with 50 part-time staff aged 18-20 working around 15 hours per week will have to find an additional £65,000 from April 2025 just to pay wages. This will particularly impact businesses reliant on part time staff such as in the retail and care sectors but especially for already struggling hospitality businesses.”

Next Generation Facing A Significantly Higher Tax Bill

She went on to say that:

“From 30 October 2024 the rates of Capital Gains Tax have already increased from 10% to 18% and 18% to 24% ahead of a stepped reduction in the benefit of a key Capital Gains Tax relief, Business Asset Disposal Relief, commencing from April 2025. Then, from April 2026 the benefit of two key Inheritance Tax reliefs is being reduced by 50% for businesses (including farms) worth more than £1 million.

“This means that further down the tracks the same family business owners are facing a significantly higher tax bill when the time comes for the next generation to take over.

“Those who are approaching retirement will now pay more Capital Gains Tax either when they sell the business or pass it on to their successors whilst still alive. On a death transfer, the Budget’s Inheritance Tax changes from April 2026 mean that whoever inherits the business will be hit with an extra 20% Inheritance Tax bill on any value over £1 million. Figures suggest that an estimated 33% of farmers in Northern Ireland will be affected.

“Many family-owned businesses and farms here started out small 20 or 30 years ago and through sheer hard work, sacrifice, and determination have grown in size. It would not be unusual for those businesses to now be worth several million pounds.”

Farmers are already finding it hard to turn a profit, so these new tax burdens will certainly not help matters. Finally, if you are a farmer who is in need of some help with their taxes and overall accounting, please get in touch with our team as soon as you can on 028 3752 2909.