---
title: "Advisers warn proposed family business tax changes could hinder generational transfers"
publisher: "Stockmark.IT"
author: "Stockmark.IT Website"
published: "2026-10-20T06:29:31+00:00"
modified: "2026-10-20T06:29:31+00:00"
date: 2026-10-20
canonical: "https://stockmark.it/disaster-advisers-raise-the-alarm-on-family-business-tax-raid/"
category: "Business"
categories: ["Business", "Tax"]
image: "https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/advisers-warn-proposed-family-business-tax-changes-could.png?fit=1536%2C1024&quality=80&ssl=1"
format: "news"
language: "en-GB"
---

# Advisers warn proposed family business tax changes could hinder generational transfers

**Published:** October 20, 2026
**Author:** Stockmark.IT Website
**Categories:** Business, Tax
**Featured image:** ![Advisers warn proposed family business tax changes could hinder generational transfers](https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/advisers-warn-proposed-family-business-tax-changes-could.png?fit=1536%2C1024&quality=80&ssl=1)

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Tax advisers have issued a stark warning that proposed changes to the taxation of family business transfers could render the handover of companies to the next generation a disaster for both owners and the wider economy. The concerns centre on reports that Chancellor John Healey is considering measures to levy income tax when business owners pass their holdings to their children. Such a shift would potentially almost double the tax bill for those involved, moving away from the current regime where transfers can be structured to attract capital gains tax, which is charged at a lower rate. The Chancellor is reportedly debating this shake-up in a bid to increase revenue in his maiden Autumn Budget, a move that has drawn sharp criticism from professionals who argue it will damage the attractiveness of the United Kingdom as an investment destination.

Tim Stovold, head of tax at Moore Kingston Smith, stated that if the proposals in the consultation are implemented as law, a number of transactions used to return value as a capital gain to a retiring generation will become much more difficult or impossible. He noted that these transactions currently allow children to take over the ownership and running of the business. Healey is reportedly debating shutting off a possible route owners frequently use to avoid a substantial one-off tax bill. Instead of selling the family business, partners often convert holdings to redeemable shares, which the business can then buy back using its own profits. Advisers warned that cutting off this capital gains tax route could affect the broader economy as well as imposing a hefty tax bill on families. Andy Oury, tax partner at Oury Clark, described the potential outcome as a disaster that would stop people investing in the UK and stop people building businesses. He argued that if individuals spend ten years building a business and find at the end that they will lose fifty per cent of its value, the sums simply do not stack up, leading to a situation where people do not want to sell their assets and the economy stalls.

Other experts warned that increasing the tax burden would not only discourage owners from transferring ownership but could force them to reconsider how they do so. Chris Etherinton, tax partner at RSM UK, suggested that while the reported Budget changes may close one potential exit door, various options should still be available to pass on a family business which trigger a capital gains tax bill rather than a large income tax liability. He pointed to structuring a sale to a family member in a similar way to a management buy-out as one possible route. This would commonly involve family members establishing a new company which then buys the shares of the individual exiting the business. Etherinton added that assuming there are good commercial reasons for the takeover, it is common for HMRC to confirm in advance that they will not apply certain income tax anti-avoidance rules. He also noted that gifting shares to the next generation should still be effective and can be achieved without an immediate capital gains tax bill.

Nicholas Smith, head of tax at Duncan & Toplis, observed that farming families and other asset-rich businesses would be particularly sensitive to the changes, especially following the upheaval of the inheritance tax system in the previous Budget. With significant wealth often tied up in land, property or business assets, additional tax liabilities can create serious financial pressures. Smith warned that coming on top of the inheritance tax changes already announced, further restrictions risk making it increasingly difficult for family businesses to plan confidently for the future. While the changes are likely to be presented by Healey as a stricter approach to tax avoidance rather than a raid, some advisers said firms will look for more ways to avoid the tax as they are battered by costs associated with new legislation and geopolitical instability. Stovold added that while the changes are designed to counter abuse of the system, a carve-out for generational shifts in business ownership would be welcome to avoid the only alternative being a sale of the business outside of the family. Advisers have urged business owners not to rush into any decisions before Healey delivers his Budget on 28 October, warning that making decisions based solely on speculation could have lasting consequences.

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