By GB News (World News) | Created at 2024-12-28 06:07:36 | Updated at 2024-12-28 20:47:48
14 hours ago
Rachel Reeves’ budget will ‘stifle’ British family businesses and ‘hand the advantage’ to faceless mega corporations and foreign competitors who don’t pay inheritance tax, industry leaders have warned.
Alongside farmers, the Labour Chancellor targeted businesses in her budget, aiming to plug some of the £22billion black hole with inheritance tax.
Business Property Relief (BPR), which previously shielded family businesses from death duties, will be capped at £1million in April 2026, with disastrous consequences for asset-rich but cash poor businesses.
Kynan Massey, Managing Director of Massey Feeds who distribute 250,000 tonnes of agricultural feed a year, brilliantly outlined the hammer blow Reeves’ death duties will have on his families’ business and others like it across the nation.
Massey, who is the fifth generation of his family to work in the business, said: “Our business is worth about £30 million.
“So with this update to the business property relief, we will have an inheritance tax bill of about £6 million.
“Our family doesn't have this type of money. The only way to pay it is somehow to take it out of the business.
“But our options are limited. The drastic option is we just sell the entire business. Or we sell a proportion of the business. Or do we back off and take out a massive loan?
“Looking at the first two options, there's no guarantee that a company coming in to buy us, or part of the business, will continue in the same way.
“Will they share the same interest in our staff and our communities? The jobs we've created could well be lost.
“The buyer could well be a foreign business where profits will not be reinvested but removed from the country.
“Overall, it actually means there'll be a decrease in the tax the company is paying. If we took out a loan, we would have to stop our investment plans for four or five years.
“We wouldn't take any more staff on. In fact, without investment, we'll see the business shrink. And so again, the amount of tax we pay [on profits etc] will actually reduce.
“So what appears to be a tax-raising policy, where the government is saying it wants to promote growth, will end up being a policy that reduces employment, reduces taxes, and reduces growth.”
Massey then highlighted how many foreign competitors don’t have to face this massive financial penalty every time a family member dies (typically every 40 years).
He said: “And it's worth noting that the family will pay the tax on the entire value of the business since it was founded, all those years ago. But when the next generation dies, it just does it all again.
“And it's similar for all the family businesses across the country. I think it's already been said there are 4.8 million family businesses, with 14 million people working in them. Other types of businesses don't have to pay this once in a generation tax.
“Foreign owned businesses don't pay this once in a generation tax. It appears to me to be an unfair tax in that it doesn't treat all businesses equally.
“And it's difficult to comprehend that a government would give our foreign investors the advantage over its own businesses.”
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Massey’s warning comes after economists warned that Reeves’ inheritance tax raid will cost the Treasury over £1billion more than it makes.
Analysis by CBI Economics shows the Treasury has ‘underestimated the impact’ of changes to business property relief (BPR), namely the majority of family businesses being forced to cut investment because of the raid.
The complete shelving of any plans for growth in the face of such large tax bills (even downsizing in some cases) will lead to the loss of 125,678 jobs, argues researchers.
The government will lose £2.6billion in tax revenue as the take from things like corporation tax, income tax and national insurance falls drastically over the next five years.
A Treasury spokesman said: “Our commitment to business is resolute – we have capped corporation tax at 25pc, confirmed full permanent expensing, and are committed to working together with business to unlock more growth opportunities for our country.
“With our public services crumbling, a £22bn inherited fiscal black hole, and only 158 estates benefitting from over half a billion pounds in business property relief in 2021-22– more than half the total value – we had to make difficult choices to fix the foundations of the country and restore economic stability so businesses can thrive.
“We have set out our modelling on the impacts of the changes to BPR at the Budget, and, as is standard practice, we will publish further analysis of the impacts alongside the draft legislation expected in 2025.”
Massey was speaking at a BPR summit which was organised by the same group who arranged the #SaveFamilyFarms rally in London on 19th November.
It brought family businesses from across the country together to discuss and highlight the crippling effect of Reeves’ Budget.
It was sponsored by Andrew Lloyd Webber hence why it was held at the London Palladium.
Labour’s changes to inheritance tax come into effect in April 2026.
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