An inheritance tax raid that simply does not add up

FOR centuries, family firms like mine have been the backbone of the British economy.

- Steve Perez

Family-owned companies make up 90% of all private businesses. There are an estimated five million and they employ nearly 16 million people - about a third of the UK workforce. These enterprises are built on generations of hard work, investment in jobs and long-term commitment to local communities.

It was for precisely this reason that, back in 1976, a Labour Chancellor, Denis Healey, introduced Business Property Relief (BPR). It was designed to reduce inheritance tax on business assets and make it “particularly helpful to the small businessman transferring his business over a period to his successors”.

So it beggars belief that current Labour Chancellor Rachel Reeves has quietly sprung a sweeping reform on family businesses — one that threatens to vandalise the very fundamentals of our economy.

Her changes will mean an increase in inheritance tax from zero to 20% on all assets worth more than £1million.

That might sound a lot but, in fact, many modest family firms with small numbers of employees will be dragged into the net.

WE'VE heard a lot about the impact of inheritance tax changes on family farms, but the impact on family firms will be even worse.