Business Tax Changes: An overview of Corporation Tax, CGT & BADR
In October 2024 the Government’s Autumn Budget made waves to Corporation Tax, Capital Gains Tax, Business Asset Disposal Relief and Business Property Relief and Agricultural Relief, impacting businesses and entrepreneurs of all sizes.
Understanding the current landscape and the upcoming changes is key to effective planning and decision-making.
While some Business Tax changes took effect immediately, many will come into force from April 2025.
Corporation Tax
A notable announcement in the Autumn Budget saw the rate of Corporation Tax remain the same at 19% for profits made under £50,000, and 25% for profits made over £250,000.
This consistency is intended to help with long-term planning and stability for businesses. and the plan is to keep this the same throughout the duration of parliament.
The government also announced that from the end of October 2024 there would be higher rates of Stamp Duty Land Tax (SDLT). For companies and non natural persons, the Government increased the single rate of SDLT, that companies would have to pay on properties over £500,000, from 15% to 17%. It is worth noting that these entities may also need to pay Annual Tax on Enveloped Dwellings.
Capital Gains Tax
Big news from the Autumn Budget saw the main rate of Capital Gains Tax (CGT) increased from 20% to 24%, and the lower rate jump from 10% to 18% . Both rises came into play on the date of announcement.
There’s also a high chance these rates will rise further in the coming years.
Business Asset Disposal Relief
The lifetime limit for Business Asset Disposal Relief (BADR) – formerly known as Entrepreneurs’ Relief -, which offers a reduced Capital Gains Tax (CGT) rate for qualifying business disposals, was maintained at £1m to encourage entrepreneurship and business investment. However, the rate of CGT that applies to BADR will be increasing from 10% to the following:
- 14% for disposals made on or after 6 April 2025.
- 18% for disposals made on or after 6 April 2026.
To qualify for BADR, the main requirement is the sale of business assets. However, additional conditions apply depending on whether you’re selling the business, shares, or assets. Learn more about the criteria for each sale type at www.gov.uk/business-asset-disposal-relief.
Calculating your CGT liability depends on whether all your gains qualify for Business Asset Disposal Relief.
TC Group can help you determine your tax position and explore opportunities to maximise your tax efficiency.
Business Property Relief and Agricultural Relief
Both Agricultural Property Relief and Business Property Relief will be reformed from April 2026.
While the existing nil-rate bands and exemptions will continue to apply, the current maximum 100% relief rate will only be available for the first £1m of combined agricultural and business assets.
Any value above this threshold will be subject to a reduced relief rate of 50%, resulting in an effective tax rate of 20%.
These changes may expose business owners and farmers to higher Inheritance Tax liabilities without proper planning.
How can TC Group support your business?
TC Group provides a joined-up approach that enables a holistic review of your business. This allows us to help you achieve your aims and how you can gain from these business tax changes and see the potential opportunities to grow.
You can contact us today for a free no-obligation consultation.