Chancellor John Healey is facing calls from business leaders to drop a “death tax” that they say is causing family firms to lose out to overseas investors. Industry bodies, representing more than 200,000 UK businesses, have written an open letter urging the Chancellor to reverse reforms to inheritance tax.
The reforms, introduced by former Chancellor Rachel Reeves, capped Business Property Relief (BPR) on inheritance tax at £1m, with assets above this threshold taxed at 50 per cent. While the government later increased the tax-free allowance to £2.5m following initial backlash, Family Business UK claims the changes continue to negatively impact family-run businesses.
According to Family Business UK, these changes have prompted family businesses to reduce investment, freeze hiring, and reconsider their long-term succession plans. Neil Davy, chief executive of Family Business UK, stated that reversing these changes would signal that Britain wants businesses to remain, invest, and grow in the country, rather than becoming forced-sale opportunities for overseas buyers.
John Newcomb, chief executive of the Builders Merchants Foundation, added that the inheritance tax changes unfairly affect the housebuilding industry, where many firms are family-run. He noted that investment decisions are already being delayed among their family-owned members.