Business leaders in the UK have urged John Healey, the Chancellor of the Exchequer, to repeal the inheritance tax changes that negatively impact family businesses. In a letter to the minister, these organizations described the decision to impose inheritance tax on businesses as "the most destructive action for private and family companies."
Impact of Tax Changes on Family Businesses
The tax changes announced by Rachel Reeves, the former Chancellor, in the 2024 budget have raised serious concerns among many businesses. These changes particularly affect family businesses and farms, subjecting them to a 20 percent inheritance tax bill on assets over one million pounds starting in April 2026.
This tax has sparked widespread anger and protests, with farmers taking to the streets of London with their tractors, warning that over 200,000 jobs are at risk. John Healey is now under pressure to fully repeal these tax changes.
An Opportunity to Reassess Tax Policies
Neil Davies, CEO of Family Business UK, who sent the letter to Healey, stated: "The Chancellor has a choice in his first budget: does he want to make conditions tougher for family businesses in the UK or encourage them to invest and hire?" He emphasized that family businesses are not only employers but also investors and economic bases in various communities.
Davies also added: "When a tax is imposed on businesses at the time of transfer to the next generation, owners may be forced to take actions that the government is trying to prevent, such as selling assets, reducing investment and jobs, or transferring the future of the business to someone else."
Leaders of various businesses, including the Ammunition Makers' Union, the Agricultural Association, and the Builders' Union, have also criticized these changes, viewing them as a serious tax penalty on family ownership. They have warned that these changes may lead to tough decisions for family business owners, including reducing investment or selling parts of the business.
Given that family businesses make up 90 percent of companies in the UK and account for 57 percent of the workforce, the importance of this sector to the UK economy is undeniable. These concerns have been particularly raised regarding the creation of sustainable economic growth across all regions of the country.
Gavin Lynn, head of the Agricultural and Business Association, said: "The new Chancellor has a golden opportunity to reassess the relationship between the government and family businesses. He should use this budget to end the uncertainty that has plagued businesses over the past two years."
The continued pressure on the Chancellor indicates that the time for implementing positive changes in tax policies to support family businesses has arrived.
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