This year’s Autumn Budget didn’t bring big headline tax rises for family businesses. But it did include changes that could affect how owners invest, take money out of the business, plan an exit and, ultimately, pass the business on.

Some of the biggest changes for family businesses actually came before this Budget. Since April 2026, Business Relief, which reduces Inheritance Tax on business assets, has become less generous. Full relief now applies only to the first £2.5 million of qualifying business assets per person, with 50% relief above that. For families who want to keep the business in the family, this could mean a sizeable Inheritance Tax bill. Gerald Edelman’s Tax Partner, Amal Shah, explains what’s changed and what families can do now in Business Relief: why family businesses should reassess their position.

This Budget doesn’t reverse those changes, but it does add a few more things to think about.

1. Planning an exit? Timing could matter

Business Asset Disposal Relief (BADR) reduces the Capital Gains Tax (CGT) owners pay when they sell all or part of their business. From 6 April 2027, the lifetime limit for this relief will fall from £1 million to £500,000. As Gerald Edelman’s Budget analysis shows, a higher-rate taxpayer with a £1 million qualifying gain could pay up to £30,000 more CGT as a result.

A new Founders’ Relief will be introduced from 6 April 2027, offering a 10% CGT rate on up to £10 million of lifetime gains. That’s a valuable saving, but it is aimed at founders of fast-growing, innovative companies and the conditions are strict. Owners must have held at least 25% of the shares from the start. The business also needs at least £10 million turnover, 15 full-time employees, and must meet at least two of three tests covering turnover growth, headcount growth and research and development spending. Many established family businesses may not qualify, particularly where the next generation now owns the shares. The rules are still under consultation, so it’s worth checking where you stand before relying on it.

If a sale, management buyout or handover to the next generation is on the horizon, it’s worth reviewing the structure and timing well before April 2027.

2. Passing ownership within the family needs careful thought

The government plans to change how payments from a company to its shareholders are taxed from April 2028. It has said genuine exits and passing the business to the next generation will be protected. However, some arrangements, such as setting up a holding company followed by a share buyback, may be taxed as income rather than as a capital gain. Draft rules are due in 2027, so it’s worth reviewing any planned restructure now.

3. Investment decisions may need revisiting

For businesses planning significant investment in equipment or machinery, the main-rate first-year allowance will rise from 40% to 50% from 1 January 2027. This lets you deduct a larger share of the cost from taxable profits in the year of purchase. However, the main writing-down allowance, the yearly deduction for the remaining cost, will fall from 14% to 12% from April 2027. Most companies can still deduct the full cost of new equipment through full expensing or the £1 million Annual Investment Allowance, so the higher rate mainly helps unincorporated businesses and those investing in equipment for leasing.

So rather than focusing on the headline increase alone, family businesses should look at the timing and tax treatment of planned spending as part of their wider investment plans.

4. Consider the family’s personal wealth alongside the business

From 6 April 2027, most unused pension funds and death benefits will count as part of a person’s estate for Inheritance Tax (IHT). We recommend reviewing pension drawdown, expressions of wish (who you would like to receive your pension), lifetime gifts and wills, as well as how any future IHT bill would be paid.

This matters for family business owners because personal and business wealth are often closely linked. Succession planning should therefore look at the business, pension, investments, and wider estate together, rather than treating each separately.

What should family business owners do now?

The key message is not to make changes just because of the Budget, but to understand how the new rules affect the family’s existing plans.

Before 6 April 2027, Gerald Edelman recommend you consider:

• Reviewing the value and ownership of the business, including how much is likely to qualify for Business Relief.
• Estimating the potential IHT bill on succession, and where the cash to pay it would come from.
• Reviewing any planned sale or exit ahead of the reduction in the BADR lifetime limit.
• Checking whether Founders’ Relief could apply, bearing in mind the rules are still being finalised.
• Including pension and estate planning in the conversation, particularly ahead of the April 2027 IHT changes.
• Reviewing governance and succession, including who will own the business, who will run it and how the next generation will make decisions.

To talk through what this means for your family business, please contact Amal Shah at acshah@GeraldEdelman.com.