Family-run manufacturers in the UK are increasingly contemplating sales of their businesses to avoid substantial inheritance tax liabilities, according to a recent report. Approximately four-fifths of owners expressed concern over the revised Business Relief rules, which now impose a 20% levy on inherited assets exceeding £2.5 million.
Prior to April of this year, those transferring a family business to the next generation benefited from 100% relief on inheritance tax. The new regulations have prompted a shift in sentiment, with four in 10 owners now open to selling their companies. This trend, detailed in a survey of 127 firms by trade body Make UK, raises concerns that the government's objective to reindustrialize Britain could be jeopardized.
The report indicates that over 20% of family-owned manufacturers are considering sales to overseas buyers, while 18% are looking at domestic sales. The authors of the report highlighted that this movement raises significant questions about the future ownership of the UK's manufacturing sector at a time when ministers are striving to rebuild domestic industrial capacity.
In addition to inheritance tax concerns, business owners also called for governmental action to address what they described as the highest energy costs within the G7 and for greater support to enhance apprenticeship programs. Fhaheen Khan of Make UK stated that if current policies compel owners to sell businesses abroad, restructure, or postpone investments, the UK risks losing valuable domestic industrial capabilities precisely when efforts are underway to rebuild them. The Treasury has been contacted for comment.