A family business has made a final plea to the Chancellor to stop a costly inheritance tax raid that threatens the future of thousands of companies.
With less than a week to go before the Budget, Rachel Reeves is being urged to pause or cancel planned changes that would see family firms hit by death duties from April.
And ministers were accused of refusing to ‘engage in meaningful consultation’ with companies at risk even though the policy would cause harm.
“You don’t have to look far to find evidence of the achievement of the Government’s Budget options,” said Neil Davy, chief executive of lobby group Family Business UK (FBUK).
‘Businesses have lost confidence. They sit on their hands. Growth is weak and the labor market is the worst we have seen in years.”
Rachel Reeves plans to hit the family company with a 20% inheritance tax bill.
Writing on the Daily Mail website, he added: ‘For a government elected on the promise of delivering growth, you have to wonder why it chose to implement policies that actively undermine that ambition and the businesses that would make it happen?’
Under reforms to so-called business property relief (BPR) and agricultural property relief (APR) announced by Reeves in last year’s Budget, family businesses and farms worth more than £1 million will be hit with a 20 per cent inheritance tax bill from April next year.
The plans have caused anger among farmers, with protesters driving tractors through central London to make their voices heard.
Family businesses are also calling for a rethink amid fears they will be forced to sell or halt investment and hiring to cover the tax bill.
Research carried out by FBUK shows that the tax raid would cost more than 200,000 jobs and reduce economic activity by £15 billion.
And far from raising £1.4 billion in Parliament, as the Treasury claims, the fund will cost £1.9 billion in job losses, according to the group.
FBUK said the inheritance tax raid was ‘unsustainable’ given the pressures already facing the business world with 65 per cent of family firms worried about jobs and raw material costs and 57 per cent concerned about high energy prices.
“We have repeatedly asked the government to engage in meaningful consultation. So far, that has been ruled out,” said Davy.
“In doing so, they are implementing policies that hurt jobs, undermine growth and, as our research shows, will make things worse for the country.
‘Taking time to pause and reconsider Family Business Tax is the right thing to do. This will show that the Government is ready to listen and support British family businesses. Next week’s budget would be an ideal time to do this.’
A survey of 2,000 family firms carried out by WSP Solicitors this week found that 37 per cent believe they are at risk of closing before the General Election in 2029, while almost one in ten expect to close in less than 12 months.
Nafeesa Hussain, at WSP Solicitors, said: ‘Family business owners are increasingly asking themselves: “What’s the point of working tirelessly to build the business if there’s nothing left to pass on?”
“This is a business built over decades. Changes in inheritance tax put the future of thousands of people at risk.”
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