More than 200,000 jobs in family-run businesses and farms could be lost as a result of upcoming changes to inheritance tax rules, according to new research that warns of a substantial hit to investment, employment and long-term economic growth.
A nationwide survey of 4,200 family-owned firms and agricultural businesses — commissioned by lobby group Family Business UK and conducted by CBI Economics — found that the government’s decision to cap relief on business and agricultural property is already having significant consequences, with more expected from 2026 onwards.
From April next year, inheritance tax relief on qualifying business and agricultural assets will be capped at a combined £1 million per estate. Beyond this threshold, relief will fall from 100 per cent to 50 per cent. While individuals can still pass on £325,000 tax-free (rising to £1.5 million for couples passing on homes to direct descendants), the changes are expected to impact some of the UK’s most productive family businesses — especially in agriculture.
According to the research, over half (55 per cent) of family businesses have already cancelled or paused investment since the changes were announced in October 2023, and nearly a quarter have put recruitment on hold or cut jobs. If these trends continue, the sector could lose 208,000 jobs between 2026 and 2029, including 28,000 in farming alone.
The report warns this could wipe £14.4 billion from the economy over the current parliament, with investment down by an average of 19 per cent and headcount shrinking by 9 per cent across family firms. The government’s estimated £500 million per year windfall from the reform could be more than offset by lost tax revenue, with the survey predicting a net loss to the Exchequer of £1.9 billion over the same period.
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