Family-run manufacturers are increasingly contemplating selling their businesses to avoid the impact of inheritance tax changes, according to a recent report. Four-fifths of owners expressed worry about the revised Business Relief rules, which impose a 20 percent levy on inherited assets exceeding £2.5 million.
Prior to April of this year, those transferring family businesses to younger generations benefited from 100 percent relief on inheritance tax. However, the recent changes have led a substantial number of owners to consider divestment. A survey conducted by the trade body Make UK, which polled 127 firms, found that 40 percent are now open to selling their companies. This trend raises concerns that the Prime Minister's objective to reindustrialize the nation might be jeopardized.
The report further indicates that over 20 percent of family-owned manufacturers are considering selling to overseas buyers, while 18 percent are contemplating a sale to a UK-based entity. The authors of the report suggest that this shift raises critical questions about the future ownership of the UK's manufacturing base, particularly as the government aims to strengthen domestic industrial capabilities.
Beyond inheritance tax, business owners also called for government action to address what they described as the highest energy costs within the G7 group of nations. Additionally, they requested support to enhance apprenticeship programs.
Fhaheen Khan from Make UK commented on the situation, stating, "If policy pushes owners to sell overseas, restructure or delay investment, the UK risks losing valuable domestic capability at the very moment it is trying to rebuild it." The Treasury has been contacted for comment on the findings. The shift in policy could lead to a significant portion of the UK's manufacturing assets being transferred to foreign ownership or being dismantled, directly conflicting with governmental ambitions to bolster domestic industry.