Wealthy families in the UK are increasingly turning to private unlimited companies as a strategic vehicle for inheritance tax (IHT) planning. The shift is a response to new tax burdens, including the inclusion of most pension funds in IHT from 2027 and a £2.5m cap on agricultural and business property relief. These structures are becoming popular alternatives to trusts, which carry a 20% upfront “entry charge.” Private unlimited companies allow individuals to transfer wealth to family members via shares; these gifts are exempt from IHT if the donor survives for seven years. A primary advantage is privacy, as these companies are not required to file public accounts. However, unlike limited companies, unlimited structures do not shield shareholders from debt. Robert Salter at Blick Rothenberg points out that if investments go south families could be vulnerable to bankruptcy. The trend towards private unlimited companies reflects a growing anxiety among the wealthy regarding the current political “direction of travel” and the potential for further wealth-related taxes, adds Chris Etherington of RSM. A Treasury spokesman insisted that Labour’s policies ensure the wealthiest estates contribute fairly while ensuring that 90% of estates remain exempt from inheritance tax.

The UK has the highest property tax burden among major economies, accounting for 3.7% of its total economy, according to Ryan’s annual business rates review. Property taxes generate £136bn annually, second only to the US. Alex Probyn, practice leader at Ryan, commented: “Business property is carrying a disproportionate share of the overall tax burden.” Nearly 40,000 companies have appealed their revised business rates, facing long wait times of up to 18 months. Rising rates, combined with increased energy costs, are forcing many firms to freeze hiring and investment plans. Commenting on the figures, Sir Mel Stride, the shadow chancellor, said Labour’s high-tax economy was “rushing investment, punishing enterprise and holding back growth.”

The Sunday Times Rich List reveals a significant exodus of Britain’s wealthiest residents, with it suggested that some of the departures are linked to tax reforms. Nearly 17% of individuals from the 2024 list are absent in 2026, primarily due to relocation. Notably, 27 foreign nationals have left, taking substantial wealth with them. It is suggested that the abolition of the non-dom tax regime and changes to inheritance tax may have prompted the exodus and are stoking fears of future tax increases. Leslie Macleod-Miller, CEO of Foreign Investors for Britain, called the list “a profit warning for Britain.” Over £780bn of wealth is now held by those living abroad, raising concerns about the UK’s investment appeal.

The Telegraph’s Szu Ping Chan reports on how business leaders are increasingly disappointed with Labour, arguing that higher taxes, rising employment costs and increasing regulation has made it very difficult for businesses to invest with confidence. Now, the political instability engulfing the country amid Labour’s leadership struggles has dragged sentiment down to new depths, according to the Institute of Directors. The International Monetary Fund is set to publish its latest assessment of the UK economy this week, which Szu Ping Chan says will be used by the Chancellor to argue that Britain must stay the course rather than change leadership. Although businesses leaders say they don’t like Keir Starmer or Rachel Reeves, they remain fearful about what regime change could bring.

The ongoing conflict in Iran is causing UK businesses to pause investment and hiring plans, according to recent surveys. A BDO report revealed that over half of medium-sized firms are struggling with rising energy costs and supply chain issues. Richard Austin from BDO stated that businesses are “struggling to absorb the latest economic shock.” The Recruitment and Employment Confederation reported a 7.7% drop in job vacancies from March to April. Neil Carberry, CEO of REC, noted that the labour market is becoming more unpredictable due to the conflict and domestic political uncertainty.

City figures are warning that a growing wave of foreign takeovers is accelerating the exodus of companies from the London Stock Exchange, with 22 listed firms worth a combined £43bn already receiving or accepting bids this year. Amid concerns that London’s persistently low valuations are making UK firms cheap targets for overseas rivals and private equity buyers, analysts say British-listed companies remain heavily undervalued compared with US markets. The UK’s FTSE 100 trades at around 15 times earnings, compared with more than 30 times for major US indices, while sterling’s relative weakness has made British assets even cheaper for foreign buyers. The trend has renewed calls for reform, with City leaders urging ministers and regulators to boost domestic investment and push pension funds to channel more money into UK equities. They argue stronger incentives are needed to encourage firms to scale and list in Britain, warning that the continued loss of listed companies risks weakening the UK’s long-term economic growth. James Ashton, chief executive of the Quoted Companies Alliance, says ministers and regulators must double down on efforts to “unleash capital flows” from institutional investors like pension funds and insurers.

UK borrowing costs have surged to their highest levels since the 2008 financial crisis, driven by investor concerns over uncertainty over the political climate and whether Sir Keir Starmer may be replaced as Prime Minister. The yield on ten-year gilts rose 18 basis points to 5.18%, while 30-year bonds increased by 19 basis points to 5.85%. The pound fell to a five-week low against the dollar, dropping 0.6% to $1.33. James Smith, an economist at ING bank, said: “Investors are focused on the impact a leadership contest might have on Britain’s fiscal trajectory.” Mark Dowding, chief investment officer at RBC BlueBay Asset Management, says the fund had increased bets against the pound “given that we struggle to see the currency rallying,” while Citi economist Callum McLaren-Stewart said: “There is a desire to spend further but limited appetite for higher taxation or further borrowing. Such economic realities may prove a constraint to any fiscal ambitions.”

UK households are facing financial uncertainty due to rising Government borrowing costs and global market instability. Thirty-year gilt yields have reached their highest since May 1998, while oil prices surged over 50% since February. Markets are pricing in up to three rate rises by early 2027, with mortgage costs likely to increase as a result. Sarah Coles, head of personal finance at AJ Bell, warned that uncertainty about the Prime Minister’s position “is just the latest in a long line of crises that have been unfolding rapidly and unpredictably across the world for months.” She has urged households to avoid panic-driven investment decisions.

The Treasury plans to reform the ring-fencing regime to enhance lending capacity at major UK banks, with Barclays, HSBC, Lloyds Banking Group, NatWest and Santander UK set to be affected by the changes. The proposed changes will allow banks to conduct more activities within safer, ring-fenced operations, including lending to public financial institutions, such as the British Business Bank and the National Wealth Fund. The reforms, which have reportedly been signed off by Chancellor Rachel Reeves, will look to ease a regulatory burden imposed following the 2008 banking crisis, with the ring-fencing regime currently forcing large banks to separate retail and SME banking operations from riskier investment and international banking in an effort to protect retail operations from large-scale financial shocks.

Hannah Prevett in the Sunday Times says that while founders have previously “worn headcount as a badge of honour,” with a feeling that “more people meant more momentum,” there appears to be a shift in attitudes towards company growth and headcount. She says that many entrepreneurs now prefer to limit their staff numbers, with some capping the size of their workforce. Business leaders, she says, argue that smaller workforces allow closer employee relationships, greater agility and more meaningful work, while avoiding layers of middle management and administrative roles which add little value. Ms Prevett notes that this shift is being accelerated by AI, which is enabling higher output without expanding payrolls. She also notes the impact of economic pressures such as higher employer National Insurance contributions, minimum wage increases and more complex employment regulation, all of which make hiring less attractive.

Concerns are rising about the impact of artificial intelligence (AI) on jobs and taxes in the UK. Arun Advani, director of the Centre for the Analysis of Taxation, warns that significant job changes could affect tax revenues. Tom Blomfield, founder of Monzo, predicts income tax may disappear within five years due to AI. The UK relies on £1.2trn in tax receipts, with income tax and National Insurance contributing £535bn. If AI leads to widespread job losses, the Government could face a £177bn shortfall, complicating public finances. Advani stated: “The problem is fiendishly complex and there are no easy answers.”

Lower-paid migrant workers are more likely to settle permanently in the UK than higher earners, according to a Home Office-backed study by the Migration Advisory Committee. The analysis of nearly 1m migrant journeys revealed that migrants earning the lowest wages are the most likely to remain in the UK long term, while those with the highest salaries are the most likely income group to leave. The report noted that 80% of care workers remained after ten years, compared to only 50% of natural and social science professionals. Robert Bates, research director at the Centre for Migration Control, warned: “Ministers must heed this warning from their own advisers and recognise that the current immigration system is storing up huge fiscal problems for the future.”

The Treasury, Bank of England and Financial Conduct Authority have warned companies to prepare for cyber risks posed by advanced AI models, saying their capabilities “are already exceeding what a ​skilled practitioner could achieve, and at a significantly higher speed, greater scale, and ​lower cost.” In a joint statement, they said malicious use of frontier AI systems could threaten firms’ resilience, customers, market integrity and wider financial stability. The warning follows comments from Andrew Bailey, the Bank’s governor, who last month highlighted concerns over AI tools which experts say could enable increasingly sophisticated cyberattacks against the banking sector.

Barclays has identified AI chip startup Fractile and Isomorphic Labs as leading players in its AI 100 ranking, showcasing the UK’s top AI companies. The ranking highlights a record £8.3bn in funding for UK AI firms in 2025. Fractile secured $220m to develop efficient AI inference chips, while Isomorphic Labs raised $2.1bn for its AI-driven drug discovery platform. However, scrutiny over AI investment claims is increasing, with concerns about the accuracy of some government-promoted infrastructure announcements. The Department for Science, Innovation and Technology stated it is not actively auditing these commitments.

Kemi Badenoch, the Conservative leader, has cautioned that Andy Burnham’s potential leadership could impose a “Burnham premium” on mortgages and borrowing costs. Speaking to Sky News, she stated that Burnham’s popularity stems from his lack of governance experience, which would expose Labour’s internal divisions on fiscal matters. Badenoch remarked: “Andy Burnham is talking about increasing borrowing – that’s going to hit everybody’s mortgages, that’s going to hit borrowing costs for this country. It’s going to put billions on debt interest. You’ll be paying a Burnham premium. I do not think that that’s going to make him popular at all.”