Budget Bites: What Family Lawyers Need to Know

I set out here the key points from the 2026 Budget which family lawyers should be aware of. These are the points to consider in respect of existing expert reports where the tax calculations may need to be revisited or when drafting new instructions. The good news is that there are not too many significant changes.

Capital gains tax ‘CGT’

The good news is that the CGT rates did not change. There are two significant changes to the reliefs.

Firstly, from 6 April 2027, the limit for Business Asset Disposal Relief “BADR” is halved from £1 million to £500,000. This potentially increases the CGT cost on a business valuation by a maximum of £30,000.

Secondly, from 6 April 2027 a new Founders’ Relief will be introduced, offering a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies. We do not yet have the full detail, but this will have a significant impact on the tax calculations for qualifying high growth companies. Solicitors and tax experts will need to get to grips with this regime in the spring.

Personal tax

A further two percentage point increase was announced to the Income Tax rates for property and savings income from April 2027. The rates applicable to property and savings income from 2027/28 will be 24% in the basic rate band, 44% in the higher rate band and 49% in the additional rate band.

No changes were announced to other Income Tax rates. The freeze of the Income Tax Personal Allowance, higher rate threshold and additional rate threshold will remain until 5 April 2031.

Companies

The main rate of corporate tax was kept at 25%. There were no significant changes that are likely to adversely impact most businesses, and the stock market has not reacted adversely to the Budget Announcements.

There were some measures intended to support the hospitality, retail and leisure sectors but I would not anticipate these will significantly impact business valuations of businesses.