Burnham urged to scrap inheritance tax raid on family firms

Andy Burnham has been urged to scrap inheritance tax on family firms and rule out further raids on struggling businesses.

In research seen by the Daily Mail, around half of family-owned companies want the new Prime Minister ‘to address falling confidence, investment and employment’.

They said this should be done by reversing Rachel Reeves’ decision to impose 20 per cent inheritance tax on family businesses and farms that threatens to destroy generations of hard work.

And, according to the research by campaign group Family Business UK (FBUK), bosses also want Burnham and his new Chancellor to ‘rule out increasing other taxes on business ownership, succession and investment’ – in particular capital gains tax (CGT) and corporation tax.

It is feared Burnham is plotting to hike CGT, which is paid on profits made when selling assets, in a bid to fund his lavish spending plans and ballooning benefits bill.

Neil Davy, chief executive of FBUK, said: ‘With his pledge to be a pro-business leader, the first 100 days in office offer the new Prime Minister a golden opportunity to embrace the power and scale of Britain’s family business sector and give firms confidence to invest and grow for the future.

‘Central to that are the changes to Inheritance Tax reliefs. That single policy change continues to present a material challenge to Britain’s family businesses and serve as a drag on both growth and employment across the country as firms pull back on investment.

‘Our latest insights send a clear message to the new administration to reverse this policy change and end speculation by making an early commitment to rule out additional tax rises on business ownership, succession and investment.

‘These two steps would give family business owners renewed confidence that this administration is prepared to work with, and not against them.’

Rachel Reeves penalised family firms – now it’s time for the new PM to back them 

Neil Davy, chief executive of Family Business UK

For family businesses, the last two years of this government have been challenging. They have been forced to adapt to almost constant uncertainty and daily speculation about the next policy in line for change or tax to be increased.

When Labour was elected in 2024, it was with a promise to be the most business-friendly government with a clear priority to create the conditions for economic growth. We, along with other business organisations, were encouraged.

But the promise has not yet been delivered and for Britain’s five million private and family-owned companies, the reality has been notably different. The ending of long-standing and well-understood rules on Inheritance Tax relief remain a penalty on family ownership and an existential threat to five million British businesses.

For the new prime minister there is a golden opportunity to change that and reset relations with family firms. His plans for greater devolution and place-based growth should prioritise family businesses and put them at the heart of that mission. To succeed, he must commit to fully reverse the changes to Inheritance Tax.

Business Property Relief and Agricultural Property Relief exist for a very clear purpose – they incentivise the business investment and long-term stewardship our country needs. But the changes to BPR and APR have achieved the opposite, forcing businesses to prioritise the short-term and tear up longstanding plans for investment and jobs.

Worse, they have created a two-tier tax system in which family businesses are penalised — they must plan for a future liability while their non-family and foreign-owned competitors do not. That simple truth continues to weigh heavily on Britain’s family business sector.

Our latest research shows that more than half of all family firms will still be affected by the change and, for those with more than fifty employees, the impact rises significantly. There is simply no downside to the immediate reversal of this policy change.

Secondly, the new prime minister must commit to stopping the inexorable tax increases on all business and be relentless in creating the policies and conditions that instil confidence to invest, expand and create jobs, particularly those for young people who are bearing the brunt of these tax changes.

Ensuring the next generation have both the skills and the opportunities takes a long-term approach is central to family businesses and critical for the future of local communities and a healthy economy.

However, a public commitment to stick to Labour’s Manifesto commitments on tax does not fill me with confidence that the incoming chancellor will take a pragmatic and proportionate approach to tax.

Next, the new prime minister must support growth for scale-up family businesses – particularly the medium-sized businesses often forgotten by policymakers. There are 10,000 mid-market, scale-up family businesses in the UK contributing more than £140billion to the UK economy and employing close to one million people. Imagine the growth and tax receipts that could arise from this cluster of businesses if they were incentivised rather than penalised.

Finally, strengthening local communities. In every part of the country family businesses are often cornerstone businesses on local high streets and communities. It is their long-term outlook and pride in place, underpinned by family values and a sustainable business model that makes them a critical part of the social fabric on which our communities and regional economies are built.