IHT unlikely to change in Budget

Andrew Hubbard, the vice-president of the Chartered Institute of Taxation, believes it is unlikely that the government will alter inheritance tax (IHT) provisions in the upcoming Budget.

"Currently we still have the fairly generous inheritance tax provisions, where you can pass it down a generation free of charge," he said. "I think we would all be very surprised to see any changes there."

He added, however, that business owners not domiciled in the UK will need to be careful.

"[The Chancellor] has had a big push at non-doms in the last few months, so if you're a non-domiciled small business owner then potentially you need to look at your structures quite carefully," he said.

The 2008 Budget will be announced on 12 March, and it will confirm changes to the capital gains tax (CGT) system.

As of April this year, business owners wishing to sell their companies will have to pay a flat rate of 18% CGT, although the Chancellor, Alistair Darling, has indicated that there will be an 'entrepreneur relief'.

"Effectively he's saying that the first million [pounds] gain, cumulatively over your life, will be taxable at 10%, not 18%," said Mr Hubbard.

"So for somebody who builds up a small business and sells it on for half a million pounds, then that's quite an attractive thing."