‘This is a shocking state of affairs’: Reeves must U-turn to save family firms from inheritance tax raid, says brewery boss WILLIAM LEES-JONES

William Lees-Jones is managing director of JW Lees Brewery

LAST week, I was at a funeral for the chairman of a family business. 

His son was giving the eulogy in the church and told the congregation that his father’s greatest fear in his last days was looming reforms to business property relief (BPR).

He felt that in some way if he died before the Government’s tax changes came in, he would have done his bit to keep the business he’d devoted his life to in the family. Isn’t that a terrible but true reflection of the changes that Rachel Reeves announced in her first Budget last year?

This is a shocking state of affairs: where families are celebrating the deaths of their loved ones because it means avoiding a huge hit to their companies and workforces. It’s not about money, it’s about a whole way of life being destroyed.

We’ve heard a lot about the impact of inheritance tax changes on family farms, but far less about the hit to family firms — which are actually far more significant.

Family companies make up over 90 per cent of the economy and employ well over half of the workforce. My own firm, JW Lees, is a seventh-generation family business predominantly invested in brewing, pubs and hotels. We employ 1,600 people nationwide, mostly in the North-West and North Wales.

JW Lees boss William Lees-Jones says family firms are ‘the lifeblood of the economy’

We have invested £10million in the business this year. If we didn’t have the uncertainty of these tax changes we would have invested considerably more, maybe double. As any businessperson knows, there is nothing worse than uncertainty.

It’s worth setting out what Chancellor Rachel Reeves’ plans will mean, as they are poorly understood — even by many of the people running the same family businesses that will be affected.

BPR was introduced by Ms Reeves’ Labour predecessor Denis Healey in 1976 specifically to protect family firms and help them thrive, such was their importance to the economy.

As Healey said, reducing inheritance tax on their assets would be ‘particularly helpful to the small businessman transferring his business over a period to his successors’.

But last year’s Budget included a surprise change to BPR which will mean an increase in inheritance tax from zero to 20 per cent on all assets worth over £1 million.

That might sound a high bar, but the effect will be to drag millions of medium-sized family firms into the tax net. Many family businesspeople inheriting a firm from the previous generation simply won’t be able to pay the multi-million-pound tax bills that will result, since lots of companies of this type are asset rich but cash poor. Unlike other types of business, the philosophy of most family firms is to take as little out of the business as possible and to adopt a long-term view that will protect the company for future generations.

We are a low margin business and to meet the new tax charges, we would probably become forced sellers of assets. Many firms will end up being sold off in part or wholly to private equity or foreign companies — whose owners won’t of course be affected by UK inheritance tax and won’t care about the workforces that companies like ours regard as part of the extended family. We have many families who have worked at JW Lees in North Manchester for generations.

Indeed, Family Business UK has estimated that there will be 208,000 job losses as a result of the Government’s proposals. This will mean an overall hit to the public finances of £1.9 billion, dwarfing the £500 million a year that the Treasury and the OBR estimate that the changes will raise.

So, the sums don’t even add up. Since this government was elected last July, there have been 50 tax changes announced — with more expected in this month’s Budget. No-one can be expected to get every decision right and for a government that says its top priorities are jobs and growth, this one simply makes no sense. Surely, we should be doing all we can to protect and encourage family businesses, not putting them in jeopardy?

The JW Lees Greengate Brewery in Middleton, Manchester

So, I would urge the Treasury: take another look at this. Consider the evidence that this tax change will cost more than it brings in. Consult properly with the family business sector. There is ample time before the reforms are due to take effect in April 2026, and we can work with government to get this right together.

I know no-one in politics ever wants to be seen to be doing a U-turn, but this time it’s the right thing to do and would win the government a lot of votes in rural constituencies where there are large numbers of people working in family businesses.

Rather than helping big hedge funds and international companies, whose priority isn’t the UK, let’s do the right thing by the family firms that are the lifeblood of the economy.

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