Trade bodies warn that Rachel Reeves’s inheritance tax reforms could lead to a loss of jobs and investment, jeopardising the future of family businesses and the UK economy
Labour’s proposed changes to inheritance tax, championed by Chancellor Rachel Reeves, have raised concerns across multiple sectors, with trade bodies warning that the reforms could lead to the loss of 125,000 jobs and destabilise thousands of family businesses. The Builders Merchants Federation (BMF), which represents suppliers of building materials, has joined 31 other trade bodies in signing an open letter expressing alarm over the impact of the reforms on family-run businesses.
The proposed changes focus on reducing Business Property Relief (BPR) and Agricultural Property Relief (APR), policies originally introduced by Labour in 1976. These reliefs allow family businesses to continue without incurring hefty tax burdens upon the death of an owner, helping them to stay operational and avoid forced sales. Critics, however, argue that the proposed changes would lead to premature business closures, job losses, and a significant reduction in economic activity, with CBI Economics estimating a £9.4 billion decline in economic output and a £1.25 billion loss to the Exchequer.
The open letter warns that limiting these reliefs could starve the economy of vital investment, forcing business owners to sell up in the face of potentially crippling inheritance tax bills. The BMF, along with other signatories, fears the consequences for industries like construction, which are pivotal to the UK’s economic recovery.
The letter’s warning comes ahead of a major protest, where Tory leader Kemi Badenoch reiterated her commitment to reversing the changes to BPR and APR. Badenoch has criticised Labour’s outreach to business leaders, particularly Reeves’s “smoked salmon offensive,” but promised to undo the proposed tax reforms to support the economy.
Embed from Getty ImagesJohn Newcomb, CEO of the BMF, highlighted that these changes threaten the stability of the construction sector and the broader UK economy, urging the government to reconsider its position.
THE TELEGRAPH
Rachel Reeves’s changes to inheritance tax, which reduce relief on family businesses and farms, have sparked backlash from economists and business leaders. A report by CBI Economics warns that the Treasury could lose over £1bn more than it gains. The slashing of business property relief (BPR) is expected to lead to reduced investment and job losses, with estimates suggesting 125,000 jobs could be lost. The resulting economic downturn may cost the Exchequer £2.6bn in tax revenue over five years, far exceeding the £1.38bn expected from the tax changes. Critics, including Conservative leader Kemi Badenoch, argue that these measures will stifle growth and drive the UK towards recession.
THE TIMES
Thousands of family businesses are urging Chancellor Rachel Reeves to reconsider her inheritance tax changes, particularly cuts to Business Property Relief (BPR) and Agricultural Property Relief (APR). A letter organized by Family Business UK, signed by 160,000 businesses, highlights the severe impact the changes will have on investment, job retention, and business continuity. The new measures include a 20% levy on inherited business assets over £1m and limits on tax relief for farmland. Critics, including agricultural and family business groups, warn that these changes could force premature business sales, particularly in rural communities, and cause job losses. Reeves’s tax hikes have raised concerns that they could stifle growth and harm small businesses, which are already struggling under rising costs and economic uncertainty.
