Following the government’s announcement it will limit agricultural and business property relief to £1m from April next year, Family Business UK has warned that the move could reduce the economic output from the country’s family businesses by £13.4bn, with a lack of clarity on how the measures will be implemented leaving company owners “in limbo.”
Family Business UK has warned that the Chancellor’s decision to cap agricultural and business property relief to £1m from April 2026 will significantly impact the long-term viability of many family firms, which represent 90 percent of the country’s private businesses.
A recent survey of 4,200 multi-generational companies showed that 55 percent had cancelled investments and 15 percent reduced staff numbers, with FBUK predicting the potential reduction in overall financial output could be as much as £13.4bn.
“It’s hard to overstate the uncertainty among family businesses since changes to inheritance tax were announced,” said FBUK’s director of communications Martin Greig. “More than six months after the Budget, there is still no guidance or advice on how these changes will work – leaving business owners in limbo and long term investment plans up in the air.”
“Research we have done at Family Business UK gives some context to this. More than half of business owners have paused or cancelled investment and one in four have either cut jobs or frozen recruitment.”
According to FBUK figures, family businesses are responsible for a combined turnover of £1.7tn and employ 13.9 million people, however the lack of clarity regarding the implementation of the new measures mean companies are already feeling the pinch.
Making clear their concerns, 13 percent of FBUK members said they currently plan to sell the company in the future, while 22 percent will look to downsize, meaning an estimated 180,000 jobs could be at risk before 2030 as a direct result of the changes to BPR and APR.
“It’s little surprise that the UK jobs market is awful and the economy just recorded its largest monthly contraction in GDP for two years. Alongside geopolitical uncertainty, rising costs, increases in NICs, Minimum Wage and the pending employment legislation, family business owners also now have to consider how they will pay a future 20 percent inheritance tax bill (if they can pay it at all?)”
“This is why Family Business UK continues to call on the Government to pause implementation of this policy change to allow time for a full and formal consultation.”
