Shadow Chancellor slams inheritance tax changes as an “absurdity”
Shadow Chancellor Mel Stride has slammed proposed changes to business tax relief, saying that the policy will force many to “shut down or be forced to sell”.
Stride’s comments echo those of prominent businesspeople and politicians who have been railing against the higher taxes announced in Labour’s budget for the last four months.
“British institutions, which in some cases have been in the same family for decades… may end up shutting down or being forced to sell to foreign buyers as a result of this single reckless policy,” Shadow Chancellor Mel Stride said in the Commons.
Business property relief, which reduces inheritance tax (IHT), is currently set at 100 per cent. However, from April 2026, only the first £1m of qualifying assets will receive 100 per cent relief; above this threshold, qualifying assets will only receive 50 per cent relief from IHT.
Stride pointed to comments by William Less Jones, owner of brewer J W Lees, who has said that the tax would “place [the] business at a considerable disadvantage to [its] competitors, who tend to be listed or owned by private equity, sometimes overseas.”
“The value… within many businesses lies in their assets, and liquidating those assets to pay those kind of liabilities, given that those assets are often instrumental to the effective working of that firm, is an absurdity,” Stride said.
“Changes will damage businesses’ ability to borrow against assets where there is a sword of Damocles hanging over their head by way of a potential future inheritance tax liability,” he added.
A report from the CBI in January found that changes to the way family businesses are taxed will leave the UK’s coffers £2.6bn worse off than before due to reduced hiring and investment.
These businesses, which employ almost 14m people and account for around 90 per cent of private companies in the UK, are projected to decrease their investment by an average of 17 per cent by 2030, the report found.
Britain’s 4.8m family businesses currently contribute more than £200bn in taxes each year.
More than half of these businesses are expected to reduce their investment by over 20 per cent and a similar amount foresee staff cuts, indicating a substantial pullback in business investment.
CEO of Family Business UK Neil Davy said: “Family businesses up and down the country can deliver the economic growth the Government wants.
“But the changes to BPR, announced in the Budget, leave them contemplating a future in which the incentive to invest in their business and employees has been removed… there is still time to find a solution that works for both the Government and family businesses.
Last month, billionaire Sir James Dyson similarly hit out at Rachel Reeves for taxes announced in Labour’s inaugural budget.
“She is killing the geese that lay the golden eggs,” he said.
“Reading The Sunday Times Tax List, I calculate that at least 60 of the top 100 UK taxpayers are owners of family businesses, with an annual tax contribution to the Exchequer of £3bn. Such companies employ 14m people and contribute many more billions — year in, year out — funding vital public services.”
“This is what Rachel Reeves will kill off with her budget,” Dyson said.