Changes to the rules on Inheritance Tax for family-owned businesses could lead to a significant reduction in economic activity and lower tax revenues, as companies plan to cut investment and jobs according to new analysis. Business Property Relief (BPR) changes, mean that from April 2026, qualifying assets over £1m will be subject to inheritance tax.
“I am the manager of a family-owned garden centre and want to leave the business to my children, however the business asset has an estimated value of £3 million. It’s not my fault that the business has a high estimate; we’ve invested money in the business to allow it to grow. My children will need to find £400,000 on my death just to keep the business in the family. It would mean they would have to sell the business just to meet the Inheritance Tax liability. Although there are gifting options, it becomes difficult and complicated when the owner makes a gift but still benefits from the business. If my children sell the business, that will mean job losses and will impact the local economy.”
“It has always been our philosophy to invest our profits back into our family business; this investment creates jobs. If my children have to pay Inheritance Tax, it will radically reduce future investment in the company and could force them to sell. I sympathise with the farmers, who are in a similar situation. The Government must change course; a lot of businesses have stopped investing, as they do not see the point in increasing the value of their asset”
Family run businesses will be severely punished.
“I’m getting sick to death of trying to explain to people that a business can be asset rich, but cash poor. Our family restaurant is located in a great position on the high street, my grandfather bought it in the 1950s and of course, the value of the property has increased dramatically, but we shouldn’t be punished because we own an asset.”
Powerful insights from real people who face tough times ahead under the Government proposals. The response from business to the BPR changes has been overwhelmingly negative. Family run businesses who want to pass their business on to the next generation will be severely punished.
Before the budget, BPR allowed business owners to invest in their asset without fear that increasing the value of the business could penalise their children on death. By capping BPR, businesses are mitigating any future tax liability, as they halt their expansion plans and start reducing their staff. Lack of investment by small and medium sized businesses has had a knock-on effect on employment and the wider economy. There is also a risk that the proposed changes will force the sale of multi-generational businesses and allow larger corporations to swamp the market creating less competition.
Concerns have also been raised that the new rules could force a business to sell, which would increase unemployment. The Government have been made aware of the independent study by CBI Economics, which has predicted a £9.4 billion reduction in the value of goods and services across the economy, as a result of the changes to BPR. The Chancellor has the nerve to scratch her head and wonder why there’s no growth! I have a simple message; stop hammering the very businesses that are integral to economic growth.
Businesses are still seeking active consultation with the Chancellor and I would strongly urge anyone who runs a family business to write to your MP and put pressure on them to change.
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