Family-owned companies are urging the new Prime Minister to reverse changes to Inheritance Tax (IHT) reliefs and rule out further tax increases on business ownership, succession, and investment. Research from campaign group Family Business UK (FBUK) indicates that approximately half of family firms want the government to address declining confidence, investment, and employment.
FBUK advocates for the reversal of Rachel Reeves' decision to impose a 20% inheritance tax on family businesses and farms, a policy they argue threatens generations of accumulated effort. Additionally, business leaders want assurances that taxes such as capital gains tax (CGT) and corporation tax will not be increased. There are concerns that the government might raise CGT to fund spending plans and the benefits bill.
Neil Davy, chief executive of FBUK, stated that the first 100 days in office present a critical opportunity for the new Prime Minister to support the family business sector. He emphasized that changes to IHT reliefs continue to pose a significant challenge, acting as a deterrent to growth and employment as businesses scale back investment.
Davy highlighted that the ending of long-standing rules on Inheritance Tax relief penalizes family ownership and poses an existential threat to an estimated five million British businesses. He noted that Business Property Relief and Agricultural Property Relief were designed to incentivize long-term investment and stewardship, but recent changes have had the opposite effect, forcing businesses to prioritize short-term survival over expansion. This has created a disparity where family firms face potential future liabilities while non-family and foreign-owned competitors do not.
FBUK's research suggests that over half of all family firms are still impacted by these changes, with larger companies experiencing a more significant effect. The group is calling for an immediate reversal of this policy. Furthermore, they urge the Prime Minister to commit to avoiding further tax increases on businesses and to focus on creating policies that foster confidence for investment, expansion, and job creation, particularly for younger generations.
Beyond IHT, FBUK also seeks support for scale-up family businesses, particularly medium-sized enterprises that contribute significantly to the UK economy. The group points out that these 10,000 businesses contribute over £140 billion and employ close to one million people. They also emphasize the crucial role family businesses play in strengthening local communities and economies through their long-term outlook and commitment to place, underpinned by family values and sustainable business models.