Family-owned companies are urging the new UK Prime Minister, Andy Burnham, to reverse Rachel Reeves' decision to impose inheritance tax on family businesses and farms, a move they claim threatens to destroy generations of hard work. Research from the campaign group Family Business UK (FBUK) indicates that approximately half of family firms desire the new administration to address falling confidence, investment, and employment.
FBUK's research also highlights a desire among business leaders for Burnham and his Chancellor to rule out increasing other taxes on business ownership, succession, and investment, particularly capital gains tax (CGT) and corporation tax. There are concerns that Burnham may consider raising CGT, levied on profits from selling assets, to fund government spending and benefits.
Neil Davy, chief executive of FBUK, stated that the first 100 days in office present a significant opportunity for the Prime Minister to support the family business sector. He emphasized that changes to Inheritance Tax reliefs remain a substantial challenge for these firms, hindering both growth and employment as companies reduce investment. Davy also called for an early commitment to prevent additional tax rises on business ownership, succession, and investment.
FBUK argues that for the past two years, family businesses have navigated constant uncertainty and speculation about policy changes and tax increases. Despite Labour's initial promise to be a business-friendly government focused on economic growth, the reality for Britain's five million private and family-owned companies has been different. The termination of long-standing Inheritance Tax relief rules is described as a penalty on family ownership and an existential threat.
The group advocates for the new Prime Minister to fully reverse the changes to Inheritance Tax. Business Property Relief (BPR) and Agricultural Property Relief (APR) were established to incentivize business investment and long-term stewardship. However, FBUK contends that the modifications have had the opposite effect, compelling businesses to prioritize short-term concerns and abandon long-term investment and job creation plans. This has also created a tiered tax system, penalizing family businesses while their non-family and foreign-owned competitors are not similarly affected.
More than half of all family firms are expected to be impacted by the changes, with the effect significantly increasing for those with over fifty employees. FBUK sees no downside to an immediate reversal of this policy. Additionally, the organization urges the Prime Minister to commit to halting further tax increases on all businesses and to foster an environment that instills confidence for investment, expansion, and job creation, particularly for younger generations.
FBUK also stresses the importance of supporting growth for scale-up family businesses, especially mid-market companies. The UK has approximately 10,000 such businesses, contributing over £140 billion to the economy and employing nearly one million people. The group believes incentivizing these firms, rather than penalizing them, could lead to significant growth and increased tax receipts.
Finally, the organization highlights the role of family businesses in strengthening local communities. Often serving as cornerstones in local high streets, their long-term outlook, pride in place, and sustainable business models, underpinned by family values, make them a critical part of the social fabric and regional economies.