Donnie Munro

With businesses anticipating a hike in capital gains tax (CGT) and other tax raising measures, the team saw a marked increase in corporate mergers and acquisitions activity across a range of sectors and particularly among SMEs and family businesses.

Although CGT was not raised to the expected levels, transactional activity in the team remains just as high in November with many businesses continuing to prepare for further reductions in relief from CGT in 2025 and 2026. The team is expecting to see the same level of sales and acquisitions right up to the end of this tax year.

Deal highlights for the period included:

• The sale of Aviemore-based infrastructure and environmental engineering contractor McGowan Group to BRUSH Group
• The sale of the Loch Ness Marathon and Etape Loch Ness to London Marathon Events
• The acquisition by Glasgow-based sustainable packaging and distribution company Green Fulfilment of fellow B Corporate business Omni Channel Fulfilment

Donnie Munro, Harper Macleod’s senior partner and head of the corporate, commercial and regulatory team, said: “Rachel Reeves’ first budget, and Labour’s first in 14 years, is likely to go down as one which, while trying to ‘rebuild’ Britain, will be viewed by others with a sense of trepidation for the future. Undoubtedly, there are always winners and losers from these major fiscal events. It’s fair to say that, in this case, some quarters of the business community were less welcoming of certain measures than others, particularly owners of businesses at the small to medium end of the spectrum, and the farming community.

“There are short, medium and long term challenges as a result of the budget.

“In the short term, from now until the end of this tax year, it’s likely we’ll continue to see the wave of business sales and disposals which we started to see since Labour’s general election victory, perhaps even earlier, as business owners anticipated a hike in taxes to fund the rebuilding of public services.

“Although the CGT rates didn’t rise to the levels some had feared, they are immediate and not insignificant enough to prompt business owners to take action quickly before further effective increases take effect in 2025 and 2026 from the reduction in business asset disposal relief. This feeling is perhaps more prevalent among smaller family-owned enterprises or SMEs which will, proportionally, feel the increases more sharply, and for who the protection of assets for future generations is much more of a concern.”

There were particular measures in Ms Reeves’ budget which directly impact the farming community which could lead to significant structural changes in the sector.

Mr Munro continued: “Looking at the medium term, this is where we see the impact on the farming and agricultural sectors coming into play more clearly. Previously, the 100 per cent agricultural property relief (APR) and business property relief (BPR) wasn’t necessarily an incentive for farm owners to realise their assets.

“By taxing these assets at 20 per cent after the first £1m from April 2026 the unintended consequence could easily be the psychological effect of feeling that a sale is necessary to return any value from a lifetime’s hard work.

“Looking longer term, it’s not uncommon for typical farming businesses to be relatively asset-rich but cash-poor, so sales might be necessary to fund future IHT liabilities because nobody wants their families to be burdened with debt. The knock-on effect from this trend could be agricultural consolidation which could change the shape of the UK’s food security position.”