Andy Burnham, the Labour leader, has been urged to scrap inheritance tax on family firms, as the party looks to support struggling businesses and family-owned enterprises. This move is seen as a potential boost for family-run businesses, which have been hit by the ongoing economic uncertainty. According to a recent report, family-owned businesses contribute significantly to the UK economy, employing millions of people and generating substantial revenue.
The UK's inheritance tax system has been a topic of debate for several years, with many arguing that it disproportionately affects family-run businesses. Under the current system, when a family business owner passes away, their heirs may be liable for inheritance tax on the business's assets. This can lead to significant financial burdens and, in some cases, even force the sale of the business.
Scrapping inheritance tax on family firms could have significant implications for the UK economy. It could provide much-needed relief to struggling businesses and help them to continue operating. However, this move would also impact inheritance tax revenue for the UK government, which could lead to a reduction in tax income. According to the Institute for Fiscal Studies, inheritance tax revenue has been increasing in recent years, with the tax raising £6.2 billion in 2024-25.
The UK's current economic climate, with high inflation and interest rates, has made it increasingly challenging for businesses to operate. Scrapping inheritance tax on family firms could be seen as a way to alleviate some of these pressures and support the UK's economy. However, any changes to the inheritance tax system would need to be carefully considered and would likely require significant debate and discussion.
In a statement, a Labour spokesperson said that the party is 'committed to supporting family-run businesses and will continue to explore ways to alleviate the pressures they face'. However, it remains to be seen whether Burnham will ultimately scrap inheritance tax on family firms.