Controversial changes to Inheritance Tax liabilities for family businesses and farms could cost the government as much as £1.87bn by the end of this Parliament, a new report has claimed.
The research, from charity Family Business UK and supported by 32 trade associations, showed that every region of the UK and every sector of the economy would potentially be hit by the government’s decision to change Business Property Relief and Agricultural Property Relief. Plans announced in last October’s budget will see APR and BPR halved for farming businesses valued above £1m from April 2026.
Analysis of 4,174 businesses and farms for the report by CBI Economics revealed that by the end of this Parliament, the proposed changes to tax relief could lead to 208,500 job losses from family businesses and across their supply chains, some £14.86bn less economic activity and a £1.87bn net fiscal loss to government.
“No industry, sector, region or parliamentary constituency will be immune,” said Neil Davy, CEO of Family Business UK. “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 also found that over 60% of businesses anticipated reducing investment by more than 20%, with average investment declines of 15.8% (APR) and 15.5% (BPR).
In addition, around a quarter (23%) have reduced headcount due to BPR and APR changes with one in five considering downsizing and 12% contemplating a sale.
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The change to the policy has also caused a reduction in community support with 15% (BPR) and 12% (APR) of businesses cutting charitable donations or community activities.
“Within our diverse and rapidly changing economy, family business owners have been building Britain for generations,” added Davy. “If they are to continue to do so, with confidence in the future, the government must urgently reconsider these policy changes.”
The report was welcomed by the NFU. President Tom Bradshaw said it showed clearly “the catastrophic impacts” and that FBUK was the latest “in a long line of respected organisations and bodies to call out this tax for what it is – flawed, badly thought out, and destructive”.
“This report must serve as a wake-up call to Treasury, or we face major cuts to investment and significant job losses.”
He repeated the union’s calls for the government to review its clawback policy, where the full 40% tax would be paid when inherited assets are sold.
“It is not too late for Treasury ministers to listen, to do the right thing, and change direction, for the sake of farming and the wider economy,” said Bradshaw. “Acting now would also remove the abhorrent untold human impacts which we have warned about and are tragically starting to come to light.”
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