Should parents pay income tax when they hand their family business to their children?
The Telegraph reports that Chancellor John Healey is considering charging parents income tax when they hand a company to their children, as part of the 28 October Budget. Handing a family business to children does not currently trigger income tax. A gift is treated as a sale at market value for capital gains tax, but gift hold-over relief can defer that for qualifying trading company shares and business assets. Inheritance tax can also apply: since April 2026, business property relief gives 100% relief on the first £2.5m per person and 50% above that. A gift becomes fully exempt if the donor survives seven years.
7 Opinions
No! The kids will pay income tax on their earnings from it along with a mountain of other taxes! Less tax and a cut in profligate spending is what we need not more taxes on hard working Brits that made & keep this going!
7th-generation Shoemaker. That's what Vivobarefoot co-founder Galahad Clark's social media profile said when I looked him up. I'm proud to live in a country where that can happen. I don't think we should do anything to stop it from continuing.
This is utterly reckless. If it leads to perfectly successful businesses having to be sold, or broken up, or if they take on massive debt to pay the tax, it risks jobs and investment.
Sounds a complicated procedure, which does cost. Don't think adding income tax to the list is helpful.
Good to see a chancellor with no business or finance experience is going as well as can be expected. I could sell my business to a "broker", and gift my kids the cash. My kids could then buy the business from the broker with cash, and no income tax would be paid.
Passing over a small family business from parents to children should remain protected so that the business doesn’t need to be broken up or sold to finance the inheritance.