Running a business has a habit of keeping you focused on the next week, next month or next year.
Which is understandable. Staff need managing. Customers need looking after. Invoices need paying.
The trouble is that whilst you're busy building the business, it's easy to put off thinking about what happens when you eventually step away from it.
The Autumn Budget 2026 included several announcements that may affect business owners, including increases to the National Living Wage, business rates changes for some sectors and a reduction in the lifetime limit for Business Asset Disposal Relief.
Whilst none of these changes necessarily require immediate action, they do provide a useful reminder that good planning rarely happens by accident. Our MD of Financial Services, Stephanie Woodward takes us through the changes.
The change most business owners should have on their radar
One of the more significant announcements was the reduction in the lifetime limit for Business Asset Disposal Relief (formerly Entrepreneurs' Relief).
Subject to the legislation taking effect, the lifetime limit is due to reduce from £1 million to £500,000 from 6 April 2027. If you're not currently thinking about selling your business, retiring or passing ownership on, that might not feel particularly important. But for those who may be considering an exit over the next few years, it's a reminder that tax rules don't stand still.
This isn't a reason to rush into a decision. It is a reason to understand what your longer-term plans are and whether they still align with your objectives.
Most business owners don't have an exit plan
That might sound surprising. But in practice, it's extremely common.
Many owners have:
- A plan for next year.
- A budget for next quarter.
- A target for growth.
What they don't always have is a clear plan for:
- Retirement.
- Succession.
- Business sale.
- Family involvement.
- Passing wealth to the next generation.
The challenge is that these decisions often become more limited when planning is left until the last minute.
What does success actually look like?
Ask ten business owners what they want from their business and you'll often get ten different answers. For some, it's about maximising value before a sale, for others, it's about creating a sustainable income. Some want to pass the business to family members, whilst others want to ensure loyal employees take over.
The "right" plan depends entirely on the objective. The problem arises when the objective hasn't been properly defined.
The business and the family are often connected
One of the common themes we see is that business planning, financial planning and estate planning become increasingly connected over time.
Questions that often arise include:
- What happens to the business if I die?
- Who could make decisions if I lost capacity?
- Does my will reflect my business interests?
- Would my family know what to do?
- How will I fund retirement?
- Is the business my retirement plan?
The answers don't necessarily sit with one adviser. This is often where accountants, solicitors and financial planners all have an important role to play, with different advisers helping to address different aspects of the same challenge.
Four questions worth asking
1. What Is my exit strategy?
- Sell it?
- Pass it on?
- Retain ownership but step back?
Many owners know they want to leave eventually but haven't decided how.
2. Is my retirement dependent on the business?
For some people, the majority of their wealth sits within the business. If that's the case, it is worth considering how and when that value might ultimately be accessed.
3. Do my legal documents reflect the reality of the business?
If you've not reviewed your will, lasting powers of attorney or shareholder agreements in recent years, it may be worth checking whether they still reflect your circumstances.
4. Would my family know what to do?
Not a pleasant thought. But an important one.
Many businesses rely heavily on the owner. The question is whether the business could continue to function if the unexpected happened.
National Living Wage and business costs
Not every Budget announcement is about succession planning.
The National Living Wage is due to increase to £13.21 an hour from April 2027, which will naturally increase costs for some employers. For many businesses, this will simply be another factor to consider when reviewing future budgets, staffing costs and pricing decisions.
The key point is that business planning is rarely about one Budget announcement in isolation. It's about understanding how all of these moving parts fit together.
Stephanie's View
The Budget included several changes that business owners may wish to be aware of. But I suspect the biggest value comes not from reacting to a specific tax rule or allowance, it comes from using the Budget as an opportunity to ask some bigger questions.
- What does the business ultimately need to achieve?
- How does it fit into your retirement plans?
- What happens if something unexpected occurs?
- And what would a successful exit actually look like?
Most business owners spend years building something that is important to them, their family and often their employees as well. It's worth spending some time thinking about what eventually happens to it.
Thinking about your own position?
Whether you're planning to grow, sell, pass on or simply protect your business, it can be helpful to take a step back and look at the bigger picture.
At Poole Townsend, our Financial Planning and Legal teams regularly work with business owners to help them consider retirement planning, succession planning, estate planning, wills and lasting powers of attorney alongside their wider personal objectives.
This article is for general information only and does not constitute financial, legal, tax or investment advice. Tax treatment depends on individual circumstances and may change in future. Business succession, estate planning, retirement planning and business disposal decisions should be considered carefully and, where appropriate, after obtaining professional advice. Eligibility for tax reliefs and exemptions will depend on individual circumstances and applicable legislation at the time.