Labour set to double the bills of family businesses in new tax grab - 5m families at risk

Labour set to double the bills of family businesses in new tax grab - 5m families at risk Chancellor John Healey is set to deliever the Autumn Budget later this month with a potential huge change set to impact millions of family businesses. Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments By Holly Kintuka , Audience Writer 13:28, Mon, Oct 19, 2026 Updated: 13:41, Mon, Oct 19, 2026 The Chancellor is set to deliver the Autumn Budget later this month (Image: Getty) Millions of family businesses in the UK are set to be hit with a heavy tax bill as Labour's plans could see it double. John Healey is set to deliver his first Budget as Chancellor on October 28, and it includes plans such as charging income tax on family firms when owners pass their businesses to their children or relatives. The new change would impact over five million family businesses across the nation, which, according to Government figures, support roughly 15 million jobs. Businesses can currently be transferred to the next generation in a way that only attracts capital gains tax (CGT). However, Labour is reportedly planning to abolish the method by introducing income tax when owners hand over the business to their children, according to The Telegraph. Article continues below ADVERTISEMENT Owners typically convert their company holdings into "reedemable shares", which the business can then buy back, instead of selling the family firm to their children, which would trigger a massive tax bill. This method would only attract a capital gains tax at up to 24%, but would be subject to income tax under the rule change. The top rate of CTG is 24%, whilst income tax is charged at 45% for high-rate taxpayers, making the tax bill almost double should the plans be put forward. This means that a family with a £1million firm would be forced to pay tax of up to £450,000 for passing it down using redeemable shares, compared with the current £240,000 under the current rules. Get the latest politics news - straight from our team in Westminster and more I would like to receive emails from the Daily Express featuring our latest products, services, offers, and promotions from across the Reach Plc family . Subscribe Invalid email You agree you are 18 or over. We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. You can unsubscribe at any time. More Info . The rule change has faced backlash from the Shadow Chancellor. Andrew Griffith told The Telegraph: “This Labour Government seems determined to squeeze every part of the economy, punishing the people who take risks, create jobs and build businesses for future generations. Article continues below ADVERTISEMENT “Not content with its Family Business Tax, Labour is once again coming after the very firms that keep our local economies running.” He said the changes would make it easier to sell a family business than to pass it down to your children, adding: “That cannot be right.” Article continues below ADVERTISEMENT Over 150 schools evacuated after 'Islamist bomb threat' as parents told 'come immediately' UK snow forecast as Met Office maps show areas set to be hit on Friday - full list Family businesses will have to pay income tax on redeemable shares under the rule change (Image: Getty) There are plenty of tax shake-up expected to be announced later on this month. With Labour pledging in its manifesto not to increase Income Tax, National Insurance or VAT rates, it is likely that the hikes will fall onto taxes on wealth and capital. Meaning, as well as the rule change surrounding family businesses, CGT itself could actually take a sharp rise. The tax has already undergone significant changes in recent years. Now it has been speculated that Labour could look to increase CGT rates to 20%, 40% and 45%, bringing them into line with income tax, driving up the costs for millions of more Brits. A Treasury ⁠spokesperson ​said: “As has always been the case, decisions on tax are a matter ​for ​the ⁠Chancellor to set out at fiscal ​events, rather than ​routinely ⁠commenting on rumour, speculation or proposals.” Labour Party Capital gains tax Income tax Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments