Family businesses have launched a last-ditch plea for the Chancellor to abandon a hugely damaging inheritance tax raid that threatens the future of thousands of companies.
With less than a week to go before the Budget, Rachel Reeves has been urged to pause or reverse planned changes that will see family firms hit with death duties from April.
And ministers stand accused of refusing to ‘engage in meaningful consultation’ with businesses in the firing line despite the damage the policy is set to cause.
‘You do not have to look far to find evidence of what the Budget choices of the Government have achieved,’ said Neil Davy, chief executive of lobby group Family Business UK (FBUK).
‘Businesses have lost confidence. They are sitting on their hands. Growth is weak and the jobs market is the worst we have seen for years.’
Rachel Reeves plans to hit family firms with 20% inheritance tax bill
Writing on the Daily Mail website, he added: ‘For a government elected on a promise of delivering growth you have to wonder why it has chosen to pursue a policy that actively undermines that ambition and the businesses that will deliver it?’
Under reforms to so-called business property relief (BPR) and agricultural property relief (APR) announced by Reeves in last year’s Budget, family businesses and farms worth more than £1m will be hit with a 20pc inheritance tax bill from April next year.
The plans have caused outrage among farmers, with protestors driving tractors through central London to make their voices heard.
Family businesses are also calling for a rethink amid fears they will be forced to sell-up or halt investment and hiring to cover the tax bill.
Research by FBUK shows the tax raid will cost more than 200,000 jobs and reduce economic activity by £15billion.
And far from raising £1.4billion in this Parliament, as the Treasury claims, it will cost £1.9billion due to the hit to jobs, according to the group.
FBUK said the inheritance tax raid was ‘untenable’ given the pressures businesses are already facing with 65 per cent of family firms concerned about employment and raw material costs and 57 per cent sounding the alarm over high energy prices.
‘We have repeatedly called on government to engage in a meaningful consultation. So far, it has ruled that out,’ said Davy.
‘By doing so, it is pursuing a policy that harms jobs, weakens growth and, as our research shows, will leave the country worse off.
‘Taking time to pause and reconsider the Family Firm Tax is the right thing to do. It would demonstrate that the Government is prepared to listen and back British family businesses. Next week’s Budget would be an ideal time to do it.’
A survey of 2,000 family firms by WSP Solicitors this week found 37 per cent believe they risk closure before the General Election in 2029 while nearly one in ten expect to shut in under 12 months.
Nafeesa Hussain, at WSP Solicitors, said: ‘Family business owners are increasingly asking themselves: “What is the point of working tirelessly to build a business if there’s nothing left to pass on?”
‘These are businesses built over decades. The changes in inheritance tax are putting the future of thousands at risk.’
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