We built it for our children. Why should handing it over become harder after the Budget?
Build a business, pay your taxes and leave something worthwhile for your children. For many landlords, that has been the plan for decades. Reports that handing over a family company could become more expensive after the next Budget have struck directly at that ambition.
The anger is easy to understand. Owners fear another tax demand at the very point when they hoped to step back and let the next generation take over.
In the Facebook discussion we have seen, the frustration goes beyond this particular proposal. People question why hard work should attract further tax, whether government spends existing revenues wisely, and whether keeping a business going is still worth the effort.
Those comments do not establish what the proposed rules would do. They do explain why this story has hit a nerve.
What has prompted the backlash?
The Telegraph has reported that changes being considered ahead of the Budget could make some family business handovers more expensive. The concern involves arrangements where a departing owner receives payments for shares as part of passing the business on.
Payments currently treated as capital could instead be taxed as income. Depending on the circumstances, that could mean a larger bill and less money left for retirement.
For a landlord who has spent years building a property company, the immediate question is personal: will passing responsibility to my children now leave me with less to live on?
That is a serious concern. However, it is not the same as announcing a new tax on every parent who gives their children shares.
Why this feels like moving the goalposts
A family business can represent decades of saving, borrowing, repairs and financial risk. Its owner may have accepted those responsibilities partly because the business would eventually support the next generation.
Property also creates a particular problem: wealth on paper does not necessarily mean cash in the bank. A company can own valuable buildings while still needing its rental income to meet mortgage payments, maintenance bills and other costs.
If a handover requires more cash for tax, where does that money come from? Further borrowing? A smaller retirement income? Selling a property the family intended to keep?
These are possible consequences to examine, rather than outcomes we can already predict. But they explain why owners hear a headline about tax reform and worry about the future of everything they have built.
What the official documents actually say
The underlying document is HMRC’s consultation on modernising the distributions framework. In ordinary language, it examines how money and capital taken out of companies should be taxed.
The consultation closed in September. As at 20 October 2026, the proposals should not be presented as an enacted tax change.
Some proposals could affect arrangements used when owners retire or reorganise a business. The accountancy body ICAEW has raised concerns about their commercial consequences.
There is therefore a substantive issue behind the headlines. Equally, the documents do not establish a blanket 45% charge on the value of every family business handed to children.
Giving away shares, receiving payment for shares and recovering money genuinely lent to a company are different transactions. They need separate tax analysis. Existing taxes can also apply, even where these proposals are irrelevant.
For landlords, another important distinction is that some existing reliefs require a trading business. Owning a rental company does not automatically meet that requirement.
Government needs to explain where it draws the line
My concern is what happens to an ordinary, gradual retirement.
A parent may want to hand over management while receiving payments over time. The children may be capable of running the business without having enough money to buy it outright. The company still needs sufficient cash to operate.
Government is entitled to challenge arrangements designed to turn taxable income into capital simply to reduce tax. It must also explain how genuine family succession will remain workable.
Before introducing changes, ministers should show which arrangements they intend to catch, why existing safeguards are insufficient, and how families already planning a handover would be treated.
Owners deserve enough certainty to make decisions that will last longer than the next Budget.
Would a higher tax bill change your plans to pass on your property business, or is the greater problem no longer trusting the rules to stay reasonably predictable?
What does this mean for your family’s plans?
Our articles on leaving beneficiaries value rather than a burden and deciding which properties to sell first explore the wider choices around succession and retirement.
If you would like to discuss your own circumstances, a £400 Property118 consultation can help identify the options worth investigating and where specialist advice is needed.
13 comments on this article
Learn from your peers’ experience
A different perspective could help you spot an issue, avoid a mistake or find a better way forward. Read the comments and add your own views if you wish.
Member Since July 2026 - Comments: 1
11:48 PM, 20th October 2026, About 2 days ago
Many landlords have spent decades building their portfolios with the intention of creating something lasting for their children.
What worries me most is that policies like this could discourage long-term thinking. Many property businesses were built to support future generations, not just the current one. If passing them on becomes increasingly costly or unpredictable, more families may decide to sell up instead. We should be encouraging succession planning and continuity, not making it harder for responsible business owners to hand over what they’ve spent a lifetime building.
Member Since October 2020 - Comments: 1392
9:16 AM, 21st October 2026, About 1 day ago
Ive always felt that handing a portfolio of rental properties to your children is a poison chalice. The industry is mired in regulation that most will be ill prepared for. Their offspring will become legally responsible from day 1 and can face fines, civil penalties, banning orders and even custodial sentences for things they’re not aware of and didnt ask for. Ageing landlords should sell up and leave them the money instead.
Member Since May 2018 - Comments: 2587
10:08 AM, 21st October 2026, About 1 day ago
Reply to the comment left by DPT at 21/10/2026 – 09:16
In a way you are just re-iterating the point that Mark is making: Under the present government you are punished for running a business (such as a property business) and as you approach retirement you are then also to be punished for HAVING run a business.
The only way out of the country’s debt crisis is to grow the economy. 90% of employment in the UK economy is in small business. You don’t grow the economy by punishing small businesses and you don’t create choice in the housing market by punishing small landlords.
Member Since October 2020 - Comments: 1392
11:17 AM, 21st October 2026, About 1 day ago
Reply to the comment left by Beaver at 21/10/2026 – 10:08
My thoughts on this pre-date the current Govt and several before them. The idea of rental properties being a legacy goes back to the mistaken notion that its not a business, but an investment, and a passive investment at that. Previous governments have encouraged that idea with the tax regime and more explicitly by discussing btl as a way to boost your pension. This is a business and a complex and heavily regulated one and not something to expect your children to run in their spare time.
Member Since May 2018 - Comments: 2587
11:47 AM, 21st October 2026, About 1 day ago
Reply to the comment left by DPT at 21/10/2026 – 11:17
I’m not disagreeing with you but the current government has run into difficulty with inheritance tax and the farming lobby for similar reasons. Margins in farming are very low and it is hard for one generation of farmers to establish a business that is viable for the long term. As some farmers approach the end of their working lives their land can now become a liability to their children and some of the collateral damage from this kind of policy is adverse environmental impact.
But a housing portfolio is also today a business that generates a low return on capital employed…you can do better with your money in the bank. You do have to wonder about governments that say they want economic growth and energy efficient housing but then make it hard for businesses to deliver it.
If you were thinking of running a business partly for the benefit of your children then the truth is that under current fiscal rules you’d be better doing it via a limited company as this would allow you to run the portfolio down towards the end of your working career and progressively transfer the equity to your children so that they didn’t have to run your properties. In the same way that labour’s changes are not necessarily good for farming and the environment labour’s policies are not necessarily good for the economy and the housing market, or for tenants: It doesn’t make sense to run the portfolio down – it would be better for society to invest in it and make it more energy resilient,
But left-wing politicians always have a problem with incentive: They destroy it. And despite their criticism of other parties they certainly do not have a monopoly on truth.
Member Since May 2017 - Comments: 845
12:44 PM, 21st October 2026, About 24 hours ago
This government hasn’t a clue about economics or business
My kids dont want my business and who can blame them? They’ve made the right choice so I’m selling off my property and will sleep easier knowing non of us will have to deal with all this stupidity any more
Member Since May 2018 - Comments: 2587
12:52 PM, 21st October 2026, About 24 hours ago
Reply to the comment left by JB at 21/10/2026 – 12:44
I think you are correct when you say this government hasn’t a clue about economics or business, and they don’t have much idea of how to grow the economy either, even though that is critical to paying for defence or a sustainable benefits system.
One of the difficulties with inheritance tax whether it is on assets held in land and buildings or assets held any other way is that if you die and in the period between the death and your beneficiaries getting the estate the assets decline in value (as they probably will in the period between the founder dying and the beneficiaries getting their act together) then the value of the estate is calculated at the time of the death. And so rather than creating a situation where you have business continuity, the state robs your family of decades of work. But this doesn’t necessarily happen in Cyprus, Portugal, Australia, New Zealand, Canada or other countries that recognise the contribution that working families make to the economy.
Left-wingers don’t care about this: They want to plunder your assets. They don’t believe in market economics anyway and it suits their purposes if markets fail.
Member Since June 2013 - Comments: 3379 - Articles: 83
5:01 PM, 21st October 2026, About 20 hours ago
Reply to the comment left by DPT at 09:16
U telling me. Giving rented houses to kids and Grandkids now could be setting em up for fines, prison, torturous hours in office. All to help someone have a home.
At today’s figures, better to sell em, invest in safe trackers and be miles better off with no prison threats
Member Since June 2013 - Comments: 3379 - Articles: 83
5:08 PM, 21st October 2026, About 19 hours ago
Are we saying an FIC is no longer what it was?
Member Since May 2018 - Comments: 2587
5:09 PM, 21st October 2026, About 19 hours ago
Reply to the comment left by Mick Roberts at 21/10/2026 – 17:01
Giving a rented house to the kids now would probably trigger a CGT charge (unless there’d been a loss). Waiting will probably trigger an IHT bill later. If you gift now and die within 7 years you might trigger both a CGT charge and also an IHT bill. You may even be making the situation worse by investing in the property and driving its value up. And yes, the government wants to punish you for being a landlord now by making you sign up to its landlord database and victimising you.
That is of course, unless your properties are held in a limited company. Because government and fiscal policies penalise the smaller, poorer landlords and favour the larger, richer ones who are more likely to raise rents.