The Association of Convenience Stores (ACS) is one of thirty two Trade Associations, representing more than 160,000 UK family-owned businesses and farms, which have written to the Chancellor calling for a full and formal consultation on changes to Inheritance Tax announced in the UK Budget.
Chancellor Rachel Reeves’s inheritance tax overhaul would mean that businesses worth more than £1m would be subject to Inheritance Tax at a rate of 20% when the business owner dies.
Family business owners will typically retain more than 90% of their personal wealth directly in the business, allocated to fund growth and investment.
But to cover the Inheritance Tax liability, business owners would be forced to take money out of the business, or even sell up.
In an open letter, led by Family Business UK, the Trade Associations warn that changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) will starve their members and the economy of investment, lead to forced, premature business sales and result in job losses right across the country.
Independent economic modelling commissioned by Family Business UK and conducted by CBI Economics suggests that far from raising revenue, the changes to BPR alone could result in a £1.25bn net fiscal loss to the Exchequer, lead to more than 125,000 job losses and reduce economic activity (GVA) by £9.4bn over the course of the Parliament.
The leaders of 32 Trade Associations who have signed the letter represent family-owned businesses in all areas of the UK economy including builders, bakers, retailers, farmers, manufacturers, mechanics, food producers, funeral directors, pubs, restaurants, garden centres, growers, electricians and recruitment agents.
Neil Davy, CEO Family Business UK said: “The model of family business ownership is unique. It powers the entire economy from farming to finance and everything in between. This letter, and those who have chosen to sign it, are testament to just how widespread family ownership is, and how committed we are to speak up on behalf of our members.
“The changes to Inheritance Tax for family businesses and farms are a hammer blow. In many cases, those inheriting the business will have no alternative but to sell up when the owner dies, rather than continue running the business.”
“In these circumstances, there is a real risk that businesses, assets and farms will be sold to foreign-owned competitors or investors who will pay little to no tax in this country.
“Already, family business owners are taking decisions to withhold planned investments and are putting recruitment on hold. Those working for family businesses are also extremely concerned, worried about how these changes might impact them.
“We do not believe that these are the outcomes the Government envisaged. So, we are calling on the Chancellor to meet and run a formal consultation, to find a solution that will protect the long-term interests of family businesses and farms and, crucially, the jobs and investment they provide.”
