Healey weighs higher income tax on family firm successions

The article says Chancellor John Healey is considering changing how tax applies when family business owners pass firms to relatives using redeemable shares. If proceeds are taxed as income rather than capital gains, the change could substantially increase the tax bill and affect how family firms plan succession.

At present, the article says higher-rate earners pay 24 per cent capital gains tax on these proceeds, compared with a top income tax rate of 45 per cent. Its example gives a £450,000 bill on a £1 million firm under the proposed treatment, against £240,000 currently; an open-market sale would remain subject to capital gains tax. The Treasury declined to comment ahead of the 28 October Budget, following an HMRC consultation that closed last month.