Autumn Budget Rewards Risk-Takers But Creates Two Classes Of Founder

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Chancellor John Healey’s first Budget will hand high-growth founders the most generous tax relief since 2020 but halves the lifetime limit on the relief many other business owners rely on, according to accountancy and business advisory firm Johnston Carmichael.

From 6 April 2027, qualifying founders of high-growth, innovative companies will benefit from a new 10%, compared with the standard 24% rate, on up to £10m of lifetime gains. Eligibility will be set following a technical consultation, but the conditions are likely to be stringent.

On the same date, the lifetime limit for Business Asset Disposal Relief (BADR), which reduces the CGT rate to 18%, is halved from £1m to £500,000. A founder who qualifies for the new relief on the full £10m could save up to £1.4m while those who rely on BADR will see their maximum saving fall from £60,000 to £30,000. The Treasury says three in four BADR claimants will be unaffected.

Alex Docherty, Partner and Head of Private Client Tax at Johnston Carmichael, said:

“Ahead of the Budget, we said founders needed a relief that properly rewards the risk of building a business. For high-growth, innovative companies, the Chancellor has delivered exactly that. A 10% rate on up to £10m tells anyone building the next big British business that the UK wants them to do it here."

“But this Budget has created two classes of founder. The engineering firm, the hotel, the family business that sustain jobs in local communities – these are the backbone of the economy, and most are unlikely to count as high-growth and innovative. The cut to Business Asset Disposal Relief affects exactly the owners who spent a lifetime building something substantial. The consultation on who qualifies for Founders’ Relief must address that divide.”

On business tax, the government reaffirmed its Corporate Tax Roadmap. The main rate of corporation tax remains capped at 25%, and full expensing continues for qualifying expenditure. But the balance of capital allowances has shifted. The main First Year Allowance rises from 40% to 50% for qualifying expenditure from 1 January 2027, while the main Writing Down Allowance falls from 14% to 12% from April 2027.

John McAuslin, Partner and Head of Corporate Tax at Johnston Carmichael, said:

“Keeping the 25% cap and full expensing gives businesses planning significant capital investment some continuity. But spending that doesn’t qualify for full expensing will now be relieved more slowly. Any business contemplating material capital expenditure should look carefully at the timing and nature of that investment, and at whether it can qualify for full expensing or the enhanced First Year Allowance.”

David Ward, Partner and Head of Tax at Johnston Carmichael, urged owner-managed and family businesses to watch a potentially significant reform of how company distributions are taxed. The proposals aim to stop profit extraction being structured to obtain more favourable tax treatment, with draft legislation due for consultation in 2027 and the new rules expected from April 2028.

He said:

“The government has committed to protecting capital treatment for genuine changes in ownership, including family business succession, and intends to expand demerger relief in some circumstances. These commitments are welcome, but the detailed rules will be critical in determining how effectively legitimate succession, shareholder exits and commercial reorganisations are protected.”

David also pointed to the sector-specific taxes funding targeted support. The Bank Corporation Tax Surcharge doubles from 3% to 6% for 15 months to help pay for lower energy bills, while Machine Games Duty on higher-stake machines rises from 20% to 25% from April 2027 to help fund a real-terms freeze in business rates for retail, hospitality and leisure properties in England.

It remains to be seen whether Scotland will follow. The Scottish Government will receive an additional £600m through the Barnett formula over the Spending Review period and sets its own Budget on 3 December.

David added:

“The Chancellor has promised breathing space now and fresh hope for the years ahead. But what businesses need most from a Budget is long-term certainty, and once again the rules have changed for people trying to plan ahead. Business Asset Disposal Relief is a case in point. Since 2020, the lifetime limit has gone from £10m to £1m and now to £500,000, and the rate has nearly doubled from 10% to 18%."

“Businesses are built over a lifetime, not a single Parliament. Owners need to plan succession years in advance, and repeated changes to the tax treatment of business disposals make that planning more difficult."

“Moves such as asking Ofgem to scrap gas standing charges are welcome, but they’re tinkering at the edges. A tax system set for the long term and then left alone would do far more for investment and growth than another round of adjustments.”

For more information on Johnston Carmichael, please visit  here.

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Dec 9, 2024

2 min read

After a year of pay exceeding inflation, the tables seem to be turning on worker pay expectations as employers take stock of regulation and tax hikes. That’s according to the latest data from international recruitment expert, Robert Half.

Key Findings:

- 63% of workers are confident in their job prospects for the next six months

- But 70% are finding it more challenging to negotiate a pay rise

- 44% of businesses funnelling budgets into technology to enhance productivity instead

Data from the firm’s latest Jobs Confidence Index (JCI) – an economic confidence tracker produced in partnership with the Centre for Economics and Business Research (Cebr) - revealed that 63% of workers are confident in their job security for the next six months. However, a slowdown in real wage growth and an eight-point drop in the pay confidence pillar of the Index indicates that the tide is turning for workers – with the power shifting back to employers.

Additional statistics from Robert Half further indicate a reversal in remuneration growth potential. According to its 2025 Salary Guide, 70% of workers are finding it more challenging to negotiate a pay rise compared to last year. Employees do, however, feel they deserve an increase, whether that’s due to the growing costs of living (39%), because they expect it every year (29%) or due to exceeding performance goals (25%)

Employers are seemingly less willing to further add to employment costs, focusing instead on improving productivity. Data from the firm’s 2025 Salary Guide revealed that 44% of businesses are planning to implement automation and digital transformation to enhance productivity, while 40% are optimising workflow management.

According to Robert Half, with increases to National Insurance Contributions (NICs) also adding to financial pressures, it is less likely workers will get the pay rise they want in the New Year.

Matt Weston, Senior Managing Director UK & Ireland, at Robert Half commented:

“Workers have seen high wage growth in response to the cost-of-living crisis, which has led to a level of expectation among employees of continued pay rises. The reality, though, is that many firms simply can’t sustain this, particularly with NICs set to increase. "

“Given that the UK’s productivity levels have remained stubbornly low, we are seeing a growing number of companies looking at ways to streamline current operations and better utilise resources. This is likely to continue until the economic climate settles from the recent upheaval we’ve experienced. However, that’s not to say that workers will lose out overall. The proposals in the Employment Rights Bill and a general recognition within the business community that advanced perks and benefits are a must in the modern world, mean that employees will reap the rewards beyond their pay packets.”

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Autumn Budget Rewards Risk-Takers But Creates Two Classes Of Founder

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