Urgent Call To Action: Preserve Inheritance Tax Relief For UK Family Businesses

The Impact of Proposed Tax Changes

Following the government’s costly partial reversal of its welfare reforms, Family Business United urges officials to abandon plans to change inheritance tax relief for family businesses. The organization emphasizes the importance of listening to voices within the family business community to drive the growth agenda.

A recent survey by the CBI and Family Business United Kingdom (FBUK) revealed a concerning trend. Proposed cuts to inheritance tax relief for farmers and family-run businesses might backfire. This could lead to a significant drop in Treasury revenue. The report estimates that this policy could result in over 200,000 job losses during this parliamentary term. Additionally, it could create a £1.9 billion net loss to the Treasury and a staggering £14.9 billion in lost economic activity.

A Clear Message from Family Business Leaders

Paul Andrews, Founder and CEO of Family Business United, has made his views clear. He states, "The Government, through the action of the Chancellor, Rachel Reeves, now faces the challenge of funding the government's U-turn on welfare."

The Straightforward Solution

"There is clearly a straightforward solution—stop penalising family farms and family businesses by abandoning the proposals. This change will allow family businesses in all sectors to pursue their growth agenda."

Andrews further explains, "The result would be the sector employing more people, investing in their infrastructure, and generating more tax revenue—rather than cutting back and searching for ways to fund future inheritance tax liabilities."

The Financial Implications

“As it stands, the proposed inheritance tax changes won’t raise any revenue; they’ll cost £1.9 billion and jeopardise 200,000 jobs.” He emphasizes that "it’s a policy the Chancellor simply cannot afford to pursue." A strong recommendation is made: consultation with family businesses is essential. Only through such dialogue can a growth agenda that delivers positive outcomes for the economy be established.

The Vital Role of Family Businesses

Family businesses serve as the engine room of the national economy. They significantly contribute to wealth creation, provide employment, and generate income. Additionally, their impact on communities throughout the nation is remarkable. These businesses already pay substantial amounts in taxes, adding to their importance.

Family Business United encourages all family businesses to speak up about the proposed changes. It is crucial that they contact their local MP to make them aware of the potential repercussions. Furthermore, Paul shares a thought from Alexandra Depledge, MBE, who is the Entrepreneurship Adviser to the Chancellor of the Exchequer.

Insights from Alexandra Depledge

"In her own words - 'I love taking risks. Usually, the bigger the better, but this new role is unprecedented even for me... our community is strong, it has heart, and most importantly it offers solutions better than any other I know. So my ask is this…'"

"If you have a good idea, a way of unblocking what’s standing in your way of building a fast-growing business, or a lens you think I should be looking at entrepreneurship through, then let’s hear it. I don’t need to know what’s wrong. I need to understand how to fix it."

You can review the full post here.

In her post, Depledge provides her email address, inviting input from the business community: Alex.Depledge@hmtreasury.gov.uk. She encourages everyone to share ways to create a better environment for family firms. Particularly, the removal of Agricultural Property Relief (APR) and Business Property Relief (BPR) could incentivize further investment and growth.

Amplifying the Voices of Family Businesses

"We have seen several U-turns on matters including the Winter Fuel Payments and now with the Welfare Reforms." Andrews asserts that MPs are rightly expressing concern over some of the changes occurring in their constituencies. It is essential to keep the messages and concerns for the family business sector on the agenda.

A Call for Action

As Paul concludes:

"We need to continue to amplify the voice of the family business sector to drive change and encourage consultation. This approach is vital for making a difference and enabling a focus on the future growth and contribution of family firms to the UK economy."

This urgency cannot be overstated. Preserving inheritance tax relief is not just about financial figures; it is about the lives it affects, the jobs it sustains, and the community it nurtures. Together, let us make our voices heard and safeguard the future of family businesses across the UK.