The 2025 Budget: What It Means for Business Growth, Succession and Exit Planning

The 2025 Budget introduced several tax and investment reforms that will influence how small business owners plan for growth, funding, succession and exit. While deal appetite is still driven by the fundamentals of each company, these policy updates will impact valuations, buyer priorities and the after-tax returns on a transaction.

As always, tailored advice remains essential, particularly for those considering funding, investment, or exit over the coming years. 

• Businesses demonstrating strong growth continue to attract higher valuations at sale. Business owners should take full advantage of measures to support growth.
• This Government is prioritising innovation, additional support for specific sectors (especially those known as the IS-8 in the Industrial Strategy), growth funding, and further funding in certain geographical areas.
• For high growth and scale-up businesses, the increase in investment limits for EIS and VCT schemes may increase investor appetite in your business, which can support growth and boost your valuation.
• Further tax allowances may be found in areas around capital expenditure, research & development and digitalisation.
• Proactive management teams should assess where support is available, monitor new announcements, and engage early. Our team can help guide you in this process.

• There are some changes to the eligibility rules of employee management incentive (EMI) schemes including increasing employee limits and values.
• These schemes can help to retain key management before or after a transaction, which will reduce the risk for any future purchaser of your company and result in higher valuations.
• They also provide more options if you are planning a management buyout as your potential exit route.
• The reduction in the capital gains tax benefit of the EOT (Employee Ownership Trust) route from 100% relief to 50% relief, may dissuade some business owners from choosing that exit route although this still remains an attractive proposition.

• The changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) announced in last year’s Budget have largely remained in place and will take effect from 6th April 2026.
• For business ownership valued at more than £1m, there could be a 20% inheritance tax liability when those assets are passed to the owner’s beneficiaries.
• Each business owner will retain 100% for the first £1m and the Budget announced that £1m can be passed to a surviving spouse, so they would have £2m relief on their death.
• Any value above that, which will mean a valuation exercise for HMRC, will be subject to inheritance tax.
• There are several possible planning measures which can be put in place. Each case is different so do speak to our team about your own personal situation and we can help put in steps to potentially mitigate this cost. 

The 2025 Budget presents both opportunity and challenge for business owners planning growth, acquisition, disposal or succession.

Seeking advice early is as important as ever. If you are considering business growth, funding or succession, our team would be pleased to support you.