‘Changes to BPR will have severe and long-lasting impact on farm businesses’
19th December 2024
A group of trade associations has called for a formal consultation, warning chancellor Rachel Reeves that changes to BPR and APR will starve their members and the economy of investment, leading to forced, premature business sales and resulting in job losses right across the country.
In an open letter, led by Family Business UK and signed by thirty-two trade associations that represent more than 160,000 UK family-owned businesses and farms, the businesses explained the consequences of the changes to Business Property Relief and Agricultural Property Relief.
The associations said that the changes to these policies will have a “severe and long-lasting” impact on these businesses and the livelihoods of the millions of people they employ.
The companies and the economy will be starved of much-needed investment, leading to forced, premature business sales and the loss of jobs in constituencies across the country.
In the absence of a published government impact assessment of the changes to BPR on family-owned businesses and a detailed analysis of the number of companies in-scope of the policy, Family Business UK (FBUK) commissioned one.
‘BPR and APR are not loopholes’
The letter reads: ‘If the purpose of this policy change is to incentivise investment, support growth, and fill a fiscal shortfall in the public finances, these changes will not deliver that. Modelling by CBI Economics shows that between 2026/7 – 2029/30 the changes to BPR could reduce economic activity (GVA) by £9.4 billion, lead to more than 125,000 job losses – including among the SMEs the government is trying to support and protect – and result in a net fiscal loss to the Exchequer of £1.25 billion.
‘BPR and APR are not loopholes. They exist for a purpose. Introduced by Labour in 1976, they allow profitable businesses to continue trading, without penalty, when the owner dies. Where a business is able to do so, a dividend covering the cost of the IHT bill can be paid. But this comes with an additional tax cost of 39.5% – effectively double taxing family-owned businesses.
‘No other model of business ownership is subject to these punitive taxes when a business transitions ownership. BPR therefore allows family businesses to compete fairly with PLCs, private equity, and other models of business ownership.”
The associations have also ensured that family businesses will support a government that “inspires entrepreneurialism, and incentivises investment, job creation, long-term growth and prosperity”.
They added: “But we need a policy landscape that encourages investment – not only for the term of a Parliament, but for future generations.”
The letter explains that a formal consultation will allow for proposals to be considered that will raise additional funds to the Treasury, incentivise family firms to invest, provide job security and sustainable livelihoods for employees, and stimulate the economic growth the country desperately needs.
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