Rachel Reeves is facing a mounting backlash over her plans to hit family farms and businesses with potentially devastating inheritance tax bills.
In the Budget last week, the Chancellor said enterprises worth more than £1m would be hit with death duties of 20 per cent from April next year.
The proposals have sparked outrage among farmers and business owners alike amid fears inheritance tax bills will force families to sell up.
The one concession Reeves did make – doubling the tax-free allowance to £2m for married couples – was dismissed by critics as ‘a minor tweak’.
Under pressure: Rachel Reeves is facing a mounting backlash over her plans to hit family farms and businesses with potentially devastating inheritance tax bills
The Country Land and Business Association (CLA), which represents 28,000 rural businesses across England and Wales, has joined the chorus of condemnation over the changes to so-called business property relief (BPR) and agricultural property relief (APR).
CLA president Gavin Lane told the Daily Mail: ‘For the 5.2m family-owned businesses, the consequences of changes to Business Property Relief coming into force in April could be existential.
‘Given the cost of machinery, stock and livestock, even family businesses and farms with modest turnovers could find themselves being valued – on paper at least – as being worth millions of pounds.
‘On that basis, when the owner dies, their children could easily face an inheritance tax bill of hundreds of thousands of pounds, even if their annual profit is a fraction of that. Put simply, many of these businesses will not survive – taking their productivity, jobs and supply chains with them.’
Research by lobby group Family Business UK shows the tax raid could cost more than 200,000 jobs and reduce economic activity by £15billion.
And far from raising some £500m a year, as the Treasury claims, it will cost £1.9billion in this Parliament alone due to the hit to jobs, according to the group.
Urging the Government to abandon the proposed inheritance tax raid, Lane said: ‘Family businesses produce 52 per cent of UK turnover – worth £2.8 trillion. The owners live above the shop. They spend locally, they employ locally. They are the backbone of our economy and of our rural communities, and they deserve the chance to grow.’
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