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Times
5 days ago
- Business
- Times
Inheritance tax changes ‘put 200,000 jobs at risk'
More than 200,000 jobs are at risk from the planned changes to inheritance tax rules for family businesses and farms, according to research. The government's decision to change the rules for business property relief (BPR) and agricultural property relief (APR) could also wipe almost £15 billion from UK economic activity and result in a £1.9 billion tax loss, the study by Family Business UK (FBUK) said. The government is planning to reform APR, which can give up to 100 per cent relief from inheritance tax on qualifying land, and BPR, which has the same effect on buildings operating as business premises. The latter is applicable not only to stately homes but on a range of properties. In October, Rachel Reeves, the chancellor, announced that from April 2026 inherited agricultural assets worth more than £1 million would be liable to inheritance tax at 20 per cent — half the usual rate. The changes, according to FBUK, could result in the loss of 208,000 jobs. Parts of Cornwall and Aberdeenshire are expected to be the worst affected, alongside Yorkshire, northern and eastern England, the Midlands and Northern Ireland. The industries expected to bear the brunt of the changes are construction, manufacturing, accommodation, hospitality and the motor industry, as well as agriculture and horticulture. Neil Davy, the chief executive of FBUK, said: 'No industry, sector, region or parliamentary constituency will be immune. In construction, services, manufacturing, tourism, transport, agriculture and horticulture, family business owners are responding to the changes to BPR and APR by tearing up long-term plans to invest in their businesses, their employees and the communities in which they are based. 'While parts of government are looking at how to boost regional growth and create opportunities in every sector of the economy, this research shows how changes to BPR and APR will achieve the exact opposite.' The research, which involved 4,174 businesses and farms, showed that for family businesses affected by the change to BPR, investment is likely to fall the most across Yorkshire & the Humber, as well as the East of England, by 17 per cent. Job losses would be greatest in parts of Scotland, the North West and North East of England.
The Independent
24-03-2025
- Business
- The Independent
Rachel Reeves's tractor tax could cost 200,000 jobs, warns new research
More than 200,000 jobs could be lost because of the government's so-called tractor tax, according to new research. The move would also cost the economy £14.9bn, according to a study by the independent consultancy CBI-Economics, which was commissioned by the group Family Business UK and looked at more than 4,000 businesses and farms across the country. Nearly a quarter of family businesses - 23 per cent - and almost one in five family farms - 17 per cent - said they had cut jobs or halted recruitment since the planned tax was announced in the October budget. Just under half of family farms - 49 per cent - said they have also paused or cancelled planned investments. Ministers are ploughing ahead with their plan to make farms valued at £1m or more liable for 20 per cent inheritance tax, despite calls from supermarket giants including Tesco for a halt to the divisive policy. The research estimates the tax hikes will see around 208,000 jobs lost by the time of the next election. Neil Davy, the chief executive of Family Business UK, said: 'Against a backdrop of huge uncertainty in global geopolitics and UK economic growth, these latest data show unequivocally the damage that is already being done to Britain's family-owned businesses and farms and the wider economy. 'Ultimately, it will be the working people, and communities right across the country, who depend on family-owned businesses and farms who'll pay the price.' The policy suffered another blow last month when the Office for Budget Responsibility (OBR) warned it may raise less than the Treasury hopes, with the £500m-a year-revenue forecast given a 'high' uncertainty rating and likely to fall after seven years as families use tax planning to avoid the charge. The Treasury says with tax allowances, in reality, only farms worth £3m would be affected - which is 28 per cent of family farms. But official Defra figures appear to suggest as many as 66 per cent could be hit. Ministers have defended the changes, saying that they had to take 'difficult decisions' in the wake of what Labour says is a £22bn black hole in the public finances left by the last Tory government. A government spokesperson said: 'Our commitment to farmers remains steadfast. This government will invest £5 billion into farming over the next two years, the largest budget for sustainable food production in our country's history. We are going further with reforms to boost profits for farmers by backing British produce and reforming planning rules on farms to support food production.' They added: 'Three-quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most people pay, and payments can be spread over 10 years, interest-free. This is a fair and balanced approach which helps fix the public services we all rely on.'
