Budget 2024: Disappointing Reduction of Business Relief for IHT

There was much in the budget to digest but the biggest disappointment (but sadly not a surprise) was the reduction of Business Relief for trading businesses to a 50% relief. This will mean that from 2027 trading businesses will be subject to a 20% tax charge on death before it is passed on (subject to an initial tax free £1m allowance).

Many businesses will not have the cash available to pay this tax (and there would be further tax on the extraction of funds to pay it) and it, therefore, effectively puts a debt burden on the business. This will place many businesses in a position of not being able to continue in their current form or in some cases at all.

For a budget where the word ‘growth’ was used so many times, burdening so many businesses that are the backbone of the British economy and employment seems very much the opposite of this.

The devil will of course be in the detail, but we will work closely with our business clients to take all fair and sensible steps to ensure that these new rules have as little impact on the continuity of their businesses as possible.

Paul Bricknell, Head of Tax & Estate Planning