Burnham urged to scrap inheritance tax raid on family firms
Andy Burnham, the new Prime Minister, is facing pressure to scrap inheritance tax changes affecting family-owned businesses and farms, and to rule out further tax increases on business ownership. Research from campaign group Family Business UK (FBUK) found that around half of family firms want the government to address falling confidence, investment and employment by reversing former Chancellor Rachel Reeves' decision to impose the levy, which critics say threatens generations of hard work built up in family enterprises.
The tax, introduced by Reeves, applies a 20 per cent inheritance tax rate to family businesses and farms, and FBUK argues it has become a drag on growth and employment as firms hold back on investment amid ongoing uncertainty. Business leaders are also urging Burnham and his Chancellor to rule out raising capital gains tax and corporation tax, amid fears he may hike CGT to help fund spending commitments and a growing benefits bill. FBUK chief executive Neil Davy said the policy represents an "existential threat" to Britain's five million family businesses and called on the new administration to use its first 100 days to reverse the changes and restore business confidence.
- Family firms urge PM Burnham to scrap 20% inheritance tax on businesses
- FBUK research: firms want confidence restored via policy reversal
- Bosses also fear rises in capital gains and corporation tax
New here? Start with this
Andy Burnham became Prime Minister after taking over from his predecessor, and one of the early tests of his government is how it handles tax policy inherited from the previous administration. At issue is an inheritance tax change brought in by former Chancellor Rachel Reeves, which means family-owned businesses and farms can face a 20 per cent inheritance tax bill when they are passed down, typically on the death of an owner. Business groups say this makes it harder for families to keep firms going across generations without having to sell assets or borrow heavily to cover the tax.
The pressure on Burnham is coming from Family Business UK, a campaign group representing family-owned firms, whose research suggests about half of these businesses want the policy reversed. The group's chief executive, Neil Davy, has described the tax as an "existential threat" to Britain's roughly five million family businesses, and is also asking the government to rule out future rises in capital gains tax and corporation tax.
This matters because family businesses make up a large part of the UK economy in terms of jobs and investment, so how the new government responds could affect confidence among business owners more broadly. There is also speculation that ministers might raise capital gains tax to help pay for public spending and a rising benefits bill, which is part of why business leaders are seeking firm assurances now, early in Burnham's time in office.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Advocates for scrapping the tax argue that family firms and farms are often asset-rich but cash-poor, meaning heirs can be forced to sell land, equipment or shares in the business simply to pay the levy, breaking up enterprises that took generations to build. They contend this discourages long-term investment and threatens the jobs such firms sustain, particularly in rural and manufacturing communities, and that stable, predictable tax treatment of business ownership is essential to restoring investor and employer confidence after a period of uncertainty.
The case against
Supporters of retaining the tax argue that inherited business wealth should not be entirely shielded from the same inheritance tax that applies to other assets, and that the reform closes a loophole that allowed very large estates to pass on wealth tax-free under the guise of business continuity. They contend the government must balance business concerns against the need to fund public services and reduce borrowing, particularly given a rising benefits bill, and that reversing the policy so soon after it was introduced would reward lobbying pressure over consistent, evidence-based fiscal policy.