Save our family firms: Rachel Reeves blasted over ‘shocking’ inheritance tax raid on business that will do ‘profound damage’ to economy
Farmers and family business owners joined forces to reverse a deal as a last resort. inheritance tax The raid threatens to destroy livelihoods as generations of hard work go to waste.
Campaigners have launched legal action against the Chancellor and HM Revenue and Customs over proposed changes that would leave them facing punitive death duties.
Lawyers in the case urged the court to make a quick decision and warned that ‘time is up’ with the tax due to be introduced next year.
Farms and family businesses worth more than £1 million will have to pay 20 per cent inheritance tax from April 2026, under reforms announced by Rachel Reeves in last year’s Budget.
The move triggered anger among farmers, who held another tractor slowdown protest yesterday, blocking major upstream and downstream roads in the country.
Family businesses are also now making their voices heard out of fear that they will be sold or broken up to pay off the tax bill.
Rachel Reeves launches inheritance tax raid on farms and family businesses
Writing in the Daily Mail, hotelier Sir Rocoo Forte said: ‘You would think that a government that has declared economic growth its number one priority would do all it could to support family businesses.
‘Not any part of it. Chancellor Rachel Reeves announced a shocking tax grab targeting these companies instead.’
He added: ‘The government’s plans risk destroying decades of stability for businesses across the country and damaging jobs and growth.
‘We are talking about loss of livelihoods, proud family legacies and profound damage to the regional economies that depend on them.’
Under the old regime, family businesses and farms could be transferred without any inheritance tax when the owner died.
But the reforms, called ‘business property relief’ (BPR) and ‘agricultural property relief’ (APR), mean that from April 2026, a 20 per cent death tax will apply to assets worth more than £1 million.
The Treasury claims the changes, called ‘family farm tax’ and ‘family business tax’, will raise around £520 million a year.
But research by lobby group Family Business UK (FBUK) shows the cost will outweigh the increase as more than 200,000 jobs are lost and firms hit the investment brakes to save money to meet the looming tax bill.
Sir Rocco Forte warns tax raid will damage jobs and growth
Campaigners applied to the High Court for a Judicial Review of the proposals, citing the Government’s failure to consult on the changes.
“Plaintiffs say the Chancellor’s decision does not comply with public law duties,” the documents filed with the Supreme Court say.
James Austen, partner at City law firm Collyer Bristow, who launched the legal claim, said: ‘Farmers have been instrumental in branding these changes the ‘Family Farm Tax’ and for good reason, but it is not just farmers who will be affected by them. From an overall economic perspective, family businesses will take the biggest hit.
‘This Judicial Review claim brings together farmers, entrepreneurs and business owners to hold a proper consultation on a policy they say will damage the UK economy and cost far more than just taxes.’
And he called on the court to make a decision as soon as possible.
‘We are pressing the court to make a decision,’ Mr Austen said. ‘The delay affects plaintiffs’ right to effective remedy. ‘Time is running out and they need a decision.’
FBUK chief executive Neil Davy accused ministers of refusing to ‘engage in meaningful consultation’ with businesses in the firing line despite the damage the policy would do.
‘You don’t have to look far to find evidence of what the Government’s Budget choices have achieved,’ he said.
‘Businesses have lost confidence. They are sitting on their hands. Growth is weak and the job market is the worst we’ve seen it in years.’
He added: ‘For a government elected on the promise of growth, you have to wonder why it has chosen to pursue a policy that actively undermines that ambition and the businesses that will deliver it?’
Nafeesa Hussain of WSP Solicitors said: ‘Family business owners are increasingly asking themselves: ‘What’s the point of working tirelessly to build a business if there’s nothing left to deliver?’
‘These are businesses that have been built over decades. ‘Changes to inheritance tax put the future of thousands of people at risk.’
This tax grab will lead to the loss of livelihoods and proud family heritage and MUST be stopped
By Sir Rocco Forte, chairman of Rocco Forte Hotels
Hospitality is in my blood. It all started with my grandfather, who came to Scotland from a small village in the hills of Italy in 1911 to open an ice cream parlour.
Since that day, the Forte family has lived and breathed hospitality; My sister Olga and my three children Lydia, Irene and Charles work in my business today.
Being a family business is what defines us. Since our name is written on the door, we attach great importance to the service offered to our guests in our hotels.
Our employees are part of our extended family and our organizations are cornerstones of local communities.
Family firms like ours make up a staggering 90 per cent of all businesses in the UK and employ over half of the entire workforce.
They are estimated to pay £422 billion in taxes and contribute to £985 billion in Gross Value Added (GVA) in 2023; this accounts for almost two-thirds of the entire private sector contribution.
So you would think that a Government that has declared economic growth as its number one priority would do all it could to support family businesses.
Not a little bit. Chancellor Rachel Reeves announced a shocking tax grab targeting these companies instead. In doing so, he undermines the work of his Labor predecessor, Denis Healey, who introduced commercial property relief in 1976. Labor then wanted to recognize the special position of family businesses in the economy and allow one generation to safely pass on a successful business to the next generation.
Under Ms Reeves’ proposals, inheritance tax on assets worth more than £1 million would rise from zero to 20 per cent from April 2026.
We’ve heard a lot about the impact on family farms, but less about the massive blow to family businesses.
As a result, many ordinary medium and large family businesses will be dragged into tax. This means the next generation of family businesses will face huge, unaffordable tax bills running into millions of pounds in many cases.
For many, the only option will be to cut costs as much as possible, break up their firm, or sell it entirely. These companies will be easy choices for private equity or foreign owners who operate in the UK and will not be subject to UK inheritance tax. Other companies will have to borrow, and take on a lot of debt, to generate dividends, themselves subject to a 40 percent tax, restricting their growth and future prospects.
The Treasury insists the change will deliver £500 million. But Family Business UK estimates this will mean 208,000 job losses; this will result in a total hit to the public finances of £1.9bn.
The government’s plans risk destroying decades of stability for businesses across the country, damaging jobs and growth.
We are talking about the loss of livelihoods, proud family legacies, and the profound damage to the regional economies that depend on them.
It is not too late for the government to change course.
All the family business sector wants is a proper review of the impact of these proposed changes. We’re sure it will show that the totals don’t add up.
If ministers are serious about growth, they cannot afford to undermine the businesses that keep our communities going, educate our young people and reinvest their profits back into Britain.
Family businesses are not faceless corporations run by fat cats; They are rooted, shaped by the care and commitment of generations, and driven by the desire to build something that will last. Take away their ability to plan for the future, to pursue their life’s work without criminal penalties, and you have dismantled one of the quiet engines of national prosperity.
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