200,000 jobs to go after Labour’s inheritance tax raid
Family owned businesses and farms across the UK are cutting jobs, halting investment and selling assets to stay afloat in response to sweeping tax changes.
According to research by CBI-Economics, commissioned by Family Business UK, the government’s move to cap business property relief (BPR) and reform agricultural property relief (APR) has triggered a wave of uncertainty.
The research found that the tax overhaul is expected to result in more than 208,000 job losses by the end of this Parliament.
It has also projected a net fiscal loss to the Treasury of £1.9bn, undermining its own revenue expectations.
Unveiled as part of the government’s broader effort to raise revenue, the tax changes place new restrictions on inheritance tax relief for agricultural land and property, and family-run businesses.
Under this move, BPR, which is a tax relief allowing family businesses to pass assets down generations without restrictive tax burdens, will now be capped at £1m.
Meanwhile, the new rules have placed APR, which has long supported generational continuity within the farming sector, under reforms.
These will further limit tax exemptions on agricultural assets.
Businesses have already taken drastic measures to mitigate the impact.
The study found that nearly a quarter of businesses (23 per cent) and 17 per cent of family farms, have already slashed their headcount since the Budget.
What’s more, over half of family-owned organisations and almost half of family farms have either paused or cancelled planned investments, citing financial uncertainty.
As the April 2026 deadline for tax changes nears, further cutbacks have also been anticipated.
The implications extend beyond UK businesses, impacting local economies and critical supply chains.
Over one in ten (12 per cent) of family businesses have planned to sell up their entire organisations to cover the future burden, with 9 per cent having already done so.
Neil Davy, chief executive of Family Business UK, warned that the government’s approach risks stifling key industries.
He said: “At a time of economic fragility, these tax changes are forcing family-run businesses – the backbone of the UK economy – into difficult decisions that will hurt investment, jobs, and growth.”
“The evidence is clear: these policies are already damaging confidence, pushing businesses to sell up, cut back, or shut down entirely.”
While the government has expected these reforms to boost public finances, the study casts doubt on its economic projections.
The office for budget responsibility (OBR) has assigned a “high” uncertainty rating to the policy, unsure how family farms and businesses would react.
Yet, the latest data provides an answer: businesses are retreating.
What’s more, the overall tax take could ultimately decline because of job losses and reduced economic activity.
Davy urged for a reassessment of the policy: “There is still time for the government to engage with businesses and find a workable solution that protects jobs and investment while achieving its revenue goals.”
With tax changes set to take full effect in 2026, pressure is mounting on ministers to reconsider their approach.
The coming months will reveal whether the government is willing to adjust course and find a more sustainable solution in response to these growing concerns.