The Fall Out for Business Owners

April 2025:

Following the delivery of the Autumn Budget 2024, many businesses (both small and large) felt increasing pressure to get their affairs in order ahead of the looming April 2025 deadline. With changes to such things as National Minimum Wage, Employer National Insurance Contributions and Capital Gains Tax that came into force in April 2025, many business owners found themselves looking to sell sooner than they may have initially anticipated in order to avoid a hike in taxation. For some this was a seamless process, however for others it was a process that highlighted the hidden issues within their organisations which ultimately lead to delays within the sale process and in turn, resulted in increased tax payments.

April 2026 Onwards:

Whilst April 2025 saw the initial introduction of fiscal measures from chancellor Rachel Reeves, April 2026 promises further significant impacts for business owners across various sectors. Here is an overview of the key changes and their implications:

Business Asset Disposal Relief (BADR) and Investors Relief (IR):

Formerly known as Entrepreneurs Relief, BADR offers a reduced Capital Gains Tax (CGT) rate on business share and asset sales. Similarly, IR provides CGT reductions for investments in qualified shares of unlisted trading companies.

Whist in April 2025 we saw the rate for BADR and IR increase from 10% to 14%, April 2026 will see a further increase to 18%. If businesses and companies are looking to sell, now would be the time to start the process in order to minimise the potential of a transaction missing the 2026 deadline.

Digital Tax Reporting:

As of 6^th April 2026, all businesses with an annual turnover of £50,000 or more will be required to file quarterly tax returns using the Making Tax Digital (MTD) system.

Following April 2027, this will be extended to businesses with annual turnovers of £30,000 and those with annual turnovers of £20,000 from April 2028. Businesses should consult their accountants and consider if they are equipped to deal with this implication.

PAYE Reform for Contractors and Agencies:

From April 2026, both agencies and end-clients (the organisation that is ultimately receiving the worker’s services), will become responsible for PAYE compliance for umbrella workers. This currently solely lies with the umbrella companies or agencies, however where there is no agency, the responsibility will lie with end-clients.

Companies should consider if this change applies to them and seek advice from their accountants where required.

Company Car Tax Adjustments:

In April 2025, it was announced that the Benefit in Kind (BiK) rate for company car tax on all cars with emissions of 1 -50g/km CO2 will rise to 18% in 2028/2029. This will increase further to 19% in 2029/2030.

The above also includes hybrid company cars, which will no longer be taxed based on their electric range. As a result of this, the tax on hybrid company cars is set to increase significantly with the most efficient hybrids increasing to 18% in 2028-2029 and to 19% by 2029/2030

For zero emissions/electric vehicles these percentages are due to increase from 2% to 3%. This rate is set to increase annually until at least 2029-2030 when it is predicted to reach 9%.

For the sake of capital allowances and BiK purposes, it was declared that double cab pick-ups are to be classed as cars. This could see a significant increase in BiK charges for business owners.

Business should consider the implication of this and ensure that they are well equipped to deal with the increased tax liabilities.

Mandatory Payrolling:

Whilst initially announced that it would come into effect in April 2026, HMRC have since announced that the mandatory payrolling of BiKs will now be delayed until April 2027. This gives employers further time to effectively prepare for this change.

This will require employers to pay Income Tax and, in some cases, National Insurance contributions on BiKs via their payroll software, rather than submitting annual P11D forms. This is said to modernise the tax system. Companies must update their systems where relevant to ensure that they are ready for this obligation. 

Inheritance Tax (IHT) Reforms:

Whilst it may not be at the forefront of a business owners mind, from April 2026, the existing 100% IHT relief will only apply to the first £1 million of combined business and agricultural assets. Any assets that exceed this threshold will be subject to a 50% relief rate, which will effectively impose a 20% IHT charge.

Shares that are listed on the Alternative Investment Market will also no longer qualify for the £1 million relief threshold and will also be subject to the 50% relief rate.

Further to this, from April 2027, any unused pension funds and death benefits payable from a pension will also be included in a person’s estate for IHT purposes.

Summary:

The recent statements and announcements made by the chancellor have implemented significant changes for business over the course of the next 5 years. Companies should look to get their affairs in order and begin preparing for these changes in order to ensure compliance and optimise their financial position/strategies ahead of the various deadlines.

By taking proactive steps, businesses can better navigate the upcoming changes and better protect their financial interests. It is important to consult with tax/financial advisors in order to develop a tailored strategy that aligns with your circumstances and goals.

Whether this being a share/assets sale, company restructuring or consideration of investments, the key here is to not delay. There is still time, however businesses should be warned to not leave this too late and face the possibility of missing their looming deadlines.

You can also complete an online enquiry form. One of the Wollens team will contact you as soon as they are available.