John Healey is eyeing yet another tax raid on family businesses, with experts warning it could push them “to extinction”.
The Chancellor is said to be weighing up plans that could see business owners hit with income tax when passing their companies down to the next generation.
Under the proposals, the existing capital gains tax would be replaced with income tax, potentially leaving some business owners facing a significantly higher bill.
Currently, families can restructure their businesses using “redeemable shares”, allowing ownership to be transferred while attracting capital gains tax at a rate of up to 24 per cent.
However, under the changes, such transfers could be subject to income tax instead, where the top rate stands at 45 per cent.
The move would mark another blow for family-run firms after Labour’s controversial inheritance tax changes, which are expected to raise more than £300million.
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.
“Not content with its Family Business Tax, Labour is once again coming after the very firms that keep our local economies running.
“Family businesses are the backbone of Britain. They provide jobs, support local communities and are often built over decades through hard work, sacrifice and personal risk.
“These changes are set to make it easier to sell a family business than to pass it on to your own children. That cannot be right.”
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