Chancellor Rachel Reeves is being urged to slam the brakes on planned changes to inheritance tax, unveiled in last year’s Budget, by a group representing family businesses.
Family Business UK (FBUK) wants the Chancellor to pause or reverse the changes when she unveils her Autumn Statement tomorrow in the House of Commons.
The group, which represents firms employing close to half a million people, says pursuing changes to Business Property Relief (BPR) and Agricultural Property Relief (APR), the government is “pursuing a policy that harms jobs, weakens growth and could lower tax revenues”.
Both are ways to reduce the amount of inheritance tax payable on certain business assets.
In a controversial move last year, the Chancellor confirmed that from April 2026, it will be less generous. This will cap the limit of 100% relief to the first £1m of combined agricultural and business property. Thereafter, a rate of 50% of relief will apply from the standard 40% inheritance tax rate, resulting in an effective tax rate of 20% on the excess value.
It sparked fury, particularly among the farming community who said it would have an enormous impact on the impact of passing down their business to family members.
Martin Twyman, 85, who owns the 900-acre HW Twyman Farm at Littlebourne, near Canterbury, said: “It could be so onerous on the next generation that, frankly, I would be better off dying before next April to save the farm’s future,”
According to research commissioned by FBUK, changes to the two could cost more than 208,000 jobs by the end of the current parliament and cut economic activity by almost £15 billion. It says that equates to a net fiscal loss of £1.9 bn.
Fiona Graham, chief operating officer at FBUK, said: “From the beginning, this government has promised that economic growth is its number one mission. There isn’t a single business in the country that wouldn’t support that.
“But if the changes to BPR and APR go ahead unchanged, then family business owners and the tens of millions of people they employ will feel let down.
“All business needs a supportive policy landscape to have the confidence to invest for the future. Higher employment and energy costs are clearly acting as a drag on growth.
“Family businesses face the additional challenge of inheritance tax. No other model of business has been singled out in this way and it has, unsurprisingly, sapped their confidence to make the long-term investments their business and this country needs.
No other model of business has been singled out in this way and it has, unsurprisingly, sapped their confidence to make the long-term investments their business and this country needs
“We have spent the last year asking government to pause this policy change and consult on workable alternatives that support growth and the model of family ownership. There is still time, and this Budget offers the perfect opportunity to announce a rethink.”
The call comes during Family Business Week which started on Monday. It celebrates the contribution family firms make to the economy and local communities.
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