Business leaders are pressing Chancellor John Healey to reverse inheritance tax reforms they say are actively damaging family-run companies across the United Kingdom.
A coalition of top industry bodies, representing more than 200,000 UK businesses, has written an open letter calling on Healey to unwind changes to Business Property Relief introduced by his predecessor Rachel Reeves.
The letter was organised by Family Business UK and co-signed by the bosses of UK Hospitality, the British Independent Retailers Association, Build UK and the Country Land and Business Association.
Reeves originally capped inheritance tax relief at £1m, meaning all assets above that threshold would be subject to a 50 per cent tax rate, provoking fierce opposition from farmers and manufacturers.
The government later reversed course under pressure, raising the tax-free allowance to £2.5m, but critics say the revised policy still inflicts serious damage on family-owned enterprises.
Family Business UK argues the changes have led family firms to reduce investment, freeze hiring and reconsider long-term succession plans, threatening the foundations of the UK’s business landscape.
Family businesses represent more than 90 per cent of all UK businesses and account for 57 per cent of the country’s workforce, according to research by the trade association.
The group claims the so-called “death tax” creates an uneven playing field by imposing conditions on British firms that do not apply to foreign companies, effectively giving overseas investors a competitive advantage.
Neil Davy, the trade body’s chief executive, said: “The Chancellor has a choice in his first Budget: make it harder for British family businesses to invest, employ and pass their businesses on to the next generation by sticking with his predecessor’s reforms, or give them the confidence to get on with building the economy.”
Davy added: “Reversing these changes would send a powerful message that Britain wants businesses to stay here, invest here and grow here – not become forced-sale opportunities for overseas buyers.”
John Newcomb, chief executive of the Builders Merchants Foundation, warned that the housebuilding sector is particularly exposed because so many firms within it are family-run operations.
Housebuilders have already faced mounting pressure from rising supply chain costs and softening consumer demand in recent months, compounding the strain caused by the tax changes.
“We are already seeing investment decisions delayed among the many family-owned businesses in our membership who will be affected by any change to inheritance tax relief,” Newcomb said.
The open letter represents one of the most coordinated business lobbying efforts directed at the new Chancellor since he took office, signalling the depth of concern across multiple industries.