Prime Minister Andy Burnham is facing urgent calls to scrap inheritance tax on family-owned enterprises . the campaign group Family Business UK warns that current tax policies threaten the survival of millions of British companies and farms.
The collision of Labour's growth pledges and the 20% inheritance tax
Labour's 2024 election victory was built on a platform of economic growth and business-friendly leadership. However, the implementation of a 20 per cent inheritance tax on family businesses and farms has created a significant rift between the government's promises and the reality for private owners. According to research by Family Business UK, approximately half of all family-owned companies believe the new administration must address declining investment and employment levels immediately.
This tension stems from a perceived shift in policy that contradicts the "pro-business" image the party sought to project.. While the government aims to fund public services , the sudden removal of tax protections has left many entrepreneurs feeling that the conditions for economic expansion are being actively undermined.
An existential threat to 5 million family-owned businesses
The campaign group warns that the current tax landscape poses an "existential threat" to Britain's five million private and family-owned companies. This pressure is not distributed equally; while more than half of all family firms will be affected by recent changes, the impact is significantly higher for businesses employing more than 50 people. As reported by the Daily Mail,these firms fear that the loss of long-standing tax rules creates a "two-tier" system where family-owned businesses face liabilities that foreign-owned competitors do not.
This disparity is particularly concerning for medium-sized "scale-up" businesses that are often overlooked by policymakers. These companies are vital for providing skills and opportunities to the next generation, yet they now face the daunting task of planning for future tax liabilities that their international rivals can largely avoid.
Neil Davy's demand to restore BPR and APR reliefs
Neil Davy, the chief executive of Family Business UK, is calling on Prime Minister Andy Burnham to use his first 100 days in office to restore Business Property Relief (BPR) and Agricultural Property Relief (APR). Davy argues that these specific reliefs are essential for incentivizing long-term stewardship and business investment across the country.
Without these protections, Davy claims that firms are being forced to prioritize short-term survival over the long-term planning required to create jobs and support local communities. He suggests that a commitment to reversing these inheritance tax changes would provide the "renewed confidence" necessary for owners to invest in their people and their infrastructure.
Will the new Chancellor hike capital gains or corporation tax?
Despite the Prime Minister's rhetoric, significant uncertainty remains regarding the fiscal direction of the new Chancellor. Family business owners are reportedly concerned that the government may hike capital gains tax or corporation tax to fund increased public spending and beneftis.. There is a growing fear among business leaders that the administration may seek to raise taxes on profits made from selling assets to cover a ballooning benefits bill.
The research indicates that business bosses are looking for a formal commitment from the administration to rule out further increases on business ownership, succession, and investment . Until such a commitment is made, the speculation regarding "tax raids" continues to act as a drag on the very growth the government has promised to deliver.
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