The budget brought the expected CGT and Employer’s NICs increases although not to the levels some had feared.

Published: 30 October 2024
Author: Dan Sharman

The combined effect of both changes means there is still a tax benefit for companies (and their employees) implementing equity-based incentive schemes rather than structuring via cash. CGT rates increasing with effect from today vindicates decisions to complete deals pre-budget but Increases to BADR rates with effect from April 2025 (and April 2026) still gives shareholders a reason to push through transactions in the next few months.

There are also long awaited changes to EBTs and EOTs - the latter being particularly impacted so that there needs to be a genuine change in ownership to the employees (ie the selling shareholders can’t retain control) and the trustee needs to be resident in the UK. I suspect sales to EOTs will remain popular though despite these increased restrictions, particularly with the increase in CGT rates, which effectively makes tax-free sales to EOTs even more attractive.