Article last updated 17 October 2025.
Autumn is the season when you’d expect to be furiously seeking new clients back from their summer breaks, rather than spending time thinking about the Chancellor’s Autumn Budget. But Budget headlines always cause a lot of talk – and this year is no different.
What’s in the news?
The media has suggested there could be reforms to capital gains tax (CGT) and inheritance tax (IHT). We could also see the introduction of national insurance payments on rental income for landlords.
Changes to inheritance tax reliefs
The upcoming changes to inheritance tax (IHT) reliefs – specifically, business relief (BR) and agricultural relief (AR) – amount to the most significant shift in succession planning for business owners in a generation. The government’s draft legislation, published on 21 July 2025, confirms that these reforms will take effect from 6 April 2026.
The first £1mn of qualifying business and agricultural assets will continue to benefit from 100% relief. However, from April 2026, any value above that threshold will only attract 50% relief. This change introduces an effective 20% IHT charge on the excess, which could mean substantial tax liabilities for larger estates. Unlike the nil rate band (NRB) and residence nil rate band (RNRB), this new £1mn allowance isn’t transferable between spouses or civil partners. However, each individual partner has their own £1mn, so a couple could have a £2mn allowance with proper planning. It applies across lifetime transfers (giving away a gift before you pass away), trusts, and estates on death, and refreshes every seven years for lifetime gifts. In other words, if you’ve gifted the entire £1mn of BR or AR assets and survived for seven years, you get a new £1mn allowance.
Trusts remain a key part of succession planning. They offer control, flexibility, and the ability to manage wealth across generations. Importantly, transfers into trust before April 2026 may still benefit from full relief. After that date, trusts will be subject to the new capped relief and may face 10-year anniversary and exit charges, depending on asset values. Trusts settled before 30 October 2024 will benefit from individual £1mn allowances, provided they held qualifying assets at that date. Trusts created after this date will share a single £1mn lifetime allowance per settlor. This distinction creates a short window of opportunity for you, if you’re considering trust planning.
The spousal exemption remains unchanged (allowing assets to pass IHT-free to a UK-domiciled spouse), but the inability to transfer the new £1mn allowance between spouses makes lifetime gifting and trust planning even more important. Gifting qualifying business assets before April 2026 may help avoid lifetime IHT charges, if the donor survives seven years. Reviewing wills and succession plans is essential to ensure they remain tax-efficient under the new regime.
Insurance cover may also be worth considering to fund potential IHT liabilities after entrepreneurs have passed away, particularly where liquidity is tied up in business assets.
There’s still an option to pay IHT in ten annual, interest-free instalments. However, where business assets are the only source of liquidity, it’s essential for you to plan ahead, to avoid forced sales or disruption to operations.
These reforms also coincide with changes to pension taxation from April 2027, which mean unused pension pots will be included in your taxable estate. This may affect how you structure your retirement and estate planning.
National insurance for landlords
The press has made much ado of the possibility of Reeves extending national insurance contributions (NICs) to rental income. Landlords currently only pay income tax on it. Personal NIC rates are 8% on total earnings up to £50,270 and 2% above that.
“This would reduce landlords’ profits and increase the cost of owning rental property,” says Ade Babatunde, Senior Financial Planning Director at Rathbones. “Combined with the new legal requirements and reduced flexibility from the Renters’ Rights Bill, these changes could make property investment less attractive to business owners and entrepreneurs.” Should these changes happen, many landlords, particularly smaller ones, may decide to leave the market or avoid expanding their portfolios.
Increase in minimum wage for business owners
Media reports have speculated on a further rise in the national minimum wage, building on the April 2025 increase to £12.21 per hour for workers aged 21 and over.
Such a move would aim to support low-income workers hit by inflation. But it could place additional strain on business owners – particularly in sectors such hospitality, retail, and care, which rely heavily on minimum-wage staff. For small and medium-sized enterprises (SMEs), the potential rise would mean higher payroll costs, tighter margins, and increased pressure to restructure pay scales to maintain fairness across roles – as a business owner, you’ll need to keep paying skilled workers more than less experienced ones, to keep them motivated.
Employer NICs rose from 13.8% to 15%, and the lower threshold for NICs kicked in at £5,000 instead of £9,100 from April 2025, increasing the financial burden on employers. Many business owners may consider slowing down hiring, reducing staff hours, or turning to automation and outsourcing to manage costs in response to this.
What should you do?
It’s a challenge to plan based on speculation. We recommend erring on the side of prudence.
If you have any questions or concerns about your business ahead of the Budget, please get in touch with your Rathbones contact or fill out our contact form below. We’re on hand to help.
This information is based on our current understanding of HMRC tax regulations in the UK. Tax treatment depends on your individual circumstances and may be subject to change in future.