Reeves urged to scrap inheritance tax raid on household companies in full after humiliating climbdown

Rachel Reeves is facing fresh calls to scrap an inheritance tax raid that threatens to destroy family firms across Britain.

In a humiliating climbdown just two days before Christmas, the Government lifted the threshold at which 20 per cent death duties will apply to family-owned businesses and farms from £1million to £2.5million.

But critics argue this does not go far enough – and are calling for the tax raid to be scrapped altogether.

Paul Andrews, founder and chief executive of campaign group Family Business United, urged the Chancellor to ‘think again and implement and full U-turn’.

Writing on the Daily Mail website, he said: ‘Family firms are the lifeblood of our communities and our economy. A Government that wants to support growth should be straining every sinew to support them. Instead, Chancellor Rachel Reeves has made them the target of an ill-thought-out tax grab.’

Rachel Reeves is accused of hitting family firms in ‘an ill-thought-out tax grab’

Andrews warned that hitting firms with a 20 per cent inheritance tax bill when they are passed on to the next generation will hit jobs and investment.

‘Many family businesses will be lost forever – businesses at the heart of communities the length and breadth of the nation, who do so much to support the communities in which they operate over and above the jobs they provide, the income they create, the wealth they produce and the taxes they already pay,’ he said.

‘We’ve heard a lot about the plight of family farmers who will be hit… but the impact on family businesses will be crippling too.’

The Chancellor has faced fierce backlash since announcing changes to agricultural property relief (APR) and business property relief (BPR) that hit family firms and farms with a 20 per cent inheritance tax bill from April 2026.

She initially said the levy would apply to enterprises worth over £1million but has since backed down and raised the threshold to £2.5million – or £5million for married couples.

The change has failed to calm anger among business owners, however, with Labour under intense scrutiny over its handling of the economy.

Bosses have praised the Mail for highlighting the issue.

Steve Rigby, chairman of Family Business UK, said: ‘The Mail should be congratulated for raising the issue so vociferously. Family businesses and family farms are critical to the fabric of the UK’s economy and food production.’

He said that even the higher threshold ‘remains a material challenge’ for family firms.

And Andrews warned the changes may end up costing the Treasury money as jobs are lost.

‘It has been estimated that the Chancellor’s reforms will lead to hundreds of thousands of job losses – the last thing we need with many of our young people struggling to find work and unemployment rising,’ he said.

‘What’s even more perverse is that it looks like they will actually cost the Treasury money rather than raise any. The Treasury forecasts that it will take in a few hundred million a year in extra tax, a very modest sum in the grand scheme of the public finances. But the scale of the job losses and all the lost tax that will result means the overall cost to the Treasury is significantly more. So the sums don’t even add up.’