Business leaders have made a last-ditch plea to the Chancellor to scrap plans to hit family firms and farms with a damaging inheritance tax raid.
Family-owned enterprises face paying death duties of 20 per cent from next month – leaving many ‘questioning the long-term future of their businesses’, according to campaign group Family Business UK (FBUK).
Warning that the looming tax raid is already costing jobs and investment, FBUK chief Neil said: ‘At a time when the UK desperately needs the economy to grow, this is the wrong policy at the wrong time.’
The comments came after the boss of Britain’s oldest wine merchant, Berry Bros and Rudd, last week told the Mail the tax raid is ‘a very real threat to the future success of the business’.
Lizzy Rudd, whose business dates back to 1698, said: ‘These changes are an additional burden for family businesses at the very time the Government should be encouraging us to invest.’
Labour has launched an inheritance tax raid on family firms
A survey by FBUK found the majority of family businesses fear they will be hit by the tax raid with a quarter worried they will not still be family-owned in a decade.
In her Budget in 2024, the Chancellor announced changes to agricultural property relief (APR) and business property relief (BPR) that left family farms and firms facing inheritance tax of 20 per cent on assets worth over £1million from this April.
She later raised the threshold to £2.5million, or £5million for married couples, but the move has not eased concerns across the sector.
Davy said: ‘Next month, for the first time in a generation, family business owners will have to pay inheritance tax based on the value of their business and business assets.
‘Since the change was first announced in October 2024, we have seen significant numbers of family businesses cut investment and jobs. Many owners have also told me that they are openly questioning the long-term future of their business.
‘For a government committed to growing the economy this can’t be the outcome it envisaged.’
FBUK is now calling for a ‘full reversal of the policy to support the family business sector and unlock investment in jobs, skills and economic growth’.
A chorus of condemnation
Lizzy Rudd, chairman of Berry Bros and Rudd, said: ‘As a 327-year-old family business, we have always strived to be stewards for future generations. As a B Corp we also place great value on employing people, considering the wider community and the environment in all that we do.
‘How are we expected to continue to build value for the long term when our children will one day have to pay inheritance tax on this value – a value which is on paper and not in our pockets unless business assets or the business itself is sold?
‘Changes to inheritance tax are a very real threat to the future success of the business. In addition to the higher costs of operating right now, these changes are an additional burden for family businesses at the very time the Government should be encouraging us to invest.
‘This tax will drive behaviour that I don’t believe the Government really want, neither does it really understand the principles on which we operate.’
Matthew Ayres, managing director of equipment supplier Bennie Group, said: ‘The new inheritance tax rules force family businesses like ours to gamble on the future.
‘Instead of focusing our energy on innovation, growth and serving our customers, we are being pushed into a defensive position. A position where we spend time and resources on complex tax planning that many other types of businesses never have to consider.
‘It is an unnecessary distraction that pulls leadership attention away from investing, hiring and building for tomorrow.’
‘Family businesses succeed when we look outward; at markets, opportunities, and long‑term value creation.
‘This policy turns us inward, encouraging risk‑averse behaviour and short‑term protectionism. It is completely out of line with the UK’s need for a clear economic growth strategy.
‘If government wants businesses to invest with confidence, it cannot keep introducing policies that create uncertainty, drive up costs, increase risk, and divert efforts away from productivity and innovation.’
James Reed, chairman and chief executive of recruitment giant Reed, said: ‘Family businesses are the backbone of our economy and generally excellent employers, so there is a good reason that for decades it has been possible to pass them safely from generation to generation.
‘The changes to the way they are taxed coming into effect in April put all that at risk. Great British companies will be broken up and sold off to foreign owners and private equity.
‘Ultimately, this isn’t good business because we know that once job losses and reduced economic activity are taken into account, this change will actually mean the exchequer collecting less money overall.
‘My concern is that this will end up being a lose-lose for everyone, which is why Labour Chancellor Denis Healey introduced business property relief in the first place.’
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