Healey urged to drop ‘death tax’ holding back family businesses
John Healey has been urged to drop a so-called “death tax” which business leaders say means family firms are losing out to overseas investors. The Chancellor has been told to unwind sweeping reforms to inheritance tax, made by his predecessor Rachel Reeves, which family businesses say undermine the government’s attempts to drive economic growth through [...]
Business leaders are urging Chancellor John Healey to abandon a so-called "death tax" that family businesses contend hinders their growth and competitiveness against overseas investors. The Chancellor is being asked to reverse sweeping inheritance tax reforms implemented by his predecessor, Rachel Reeves, which family businesses claim undermine the government's efforts to boost economic growth through devolution.
A coalition of prominent industry bodies, representing more than 200,000 UK businesses, has penned an open letter urging Healey to undo Reeves' policies. Reeves' decision to cap relief on inheritance tax at £1 million meant that any assets above this threshold would be taxed at a steep 50%. This move irked UK farmers and manufacturers, prompting the government to backtrack on the measure and increase the tax-free allowance to £2.5 million.
However, Family Business UK, which organized the letter to Healey, maintains that the changes have still negatively impacted family-run businesses, leading them to cut back on investment, halt hiring, and reassess their long-term succession plans. Family businesses constitute more than 90% of UK businesses and employ 57% of its workforce, according to trade association research.
Family Business UK argues that the "death tax" imposes unfair tax conditions on British firms that do not apply to foreign companies, thereby giving overseas investors an advantage. Neil Davy, the trade body's chief executive, stated: "The Chancellor must choose between making it harder for British family businesses to invest, employ, and pass on their firms to the next generation, or providing them with the confidence to continue building the economy.
'Reversing these changes would send a strong signal that Britain wants businesses to stay, invest, and grow here, rather than becoming targets for acquisition by overseas buyers.'
John Newcomb, chief executive of the Builders Merchants Foundation, emphasized that the inheritance tax changes unfairly affected the housebuilding industry, as many of these firms are family-owned. Since the Iran war erupted, housebuilders have faced rising supply chain costs and diminished consumer demand, leading to delayed investment decisions among family-run businesses in Newcomb's membership.
The letter was also signed by leaders of UK Hospitality, the British Independent Retailers Association, Build UK, and the Country Land and Business Association.
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