Family businesses in the UK are urgently calling on Chancellor Rachel Reeves to reconsider proposed changes to inheritance tax that threaten their survival. With less than a week remaining before the upcoming Budget, industry leaders warn that the changes could jeopardize thousands of enterprises across the country.
From April 2026, family businesses and farms valued at over £1 million will face a 20% inheritance tax on their assets, as part of reforms to business property relief (BPR) and agricultural property relief (APR). This move has sparked significant backlash, with critics claiming it undermines the very businesses that the government aims to support.
Neil Davy, chief executive of lobby group Family Business UK (FBUK), expressed deep concern over the government’s lack of engagement with business owners. He stated, “You do not have to look far to find evidence of what the Budget choices of the Government have achieved. Businesses have lost confidence. They are sitting on their hands. Growth is weak and the jobs market is the worst we have seen for years.”
Protest actions, including tractor demonstrations in central London, have highlighted the urgent need for the government to reevaluate its stance. Farmers and family business advocates argue that the tax changes could force many to sell their operations or cease hiring, stifling growth and economic activity.
Research conducted by FBUK indicates that the proposed tax changes could lead to the loss of more than 200,000 jobs and a reduction in economic output by £15 billion. Contrary to the Treasury’s assertion that the reforms would generate £1.4 billion in revenue, FBUK argues the measures could ultimately cost the economy £1.9 billion due to job losses and decreased investment.
Davy emphasized the need for meaningful consultation with business leaders, stating, “We have repeatedly called on government to engage in a meaningful consultation. So far, it has ruled that out. By doing so, it is pursuing a policy that harms jobs, weakens growth and will leave the country worse off.”
A recent survey of 2,000 family firms by WSP Solicitors revealed alarming statistics: 37% of respondents believe they risk closure before the next General Election in 2029, while nearly 10% expect to shut down within the next year. Nafeesa Hussain from WSP Solicitors noted the frustration among business owners, stating, “Family business owners are increasingly asking themselves: ‘What is the point of working tirelessly to build a business if there’s nothing left to pass on?’ These are businesses built over decades. The changes in inheritance tax are putting the future of thousands at risk.”
As the Budget approaches, family businesses are hoping that the government will pause to reconsider these changes. Advocates argue that a thoughtful approach would demonstrate the government’s commitment to supporting the backbone of the UK economy, allowing family firms to thrive and contribute to future growth.
