No10 warned over risk of ‘killing off’ family-run firms
Downing Street is attempting to weather a storm whipped up by entrepreneur James Dyson over changes to the inheritance tax treatment of family-run businesses.
In an article in the Times, Dyson accused the government of “killing off family businesses, individual aspiration and economic growth” with their approach to death duties in the Budget.
The high-profile entrepreneur, whose farming interests also saw him attack changes to agricultural inheritance tax (IHT), wrote in the newspaper that “the very fabric of our economy is being ripped apart.
“No business can survive Reeves’s 20 per cent tax grab. It will be the death of entrepreneurship.”
The Prime Minister’s official spokesman insisted yesterday that the government had “taken a balanced approach” to the Budget and had been “upfront and honest with the British public about the dire state of the public finances the government inherited and…the difficult choices and trade-offs needed in order to restore economic stability and lay the foundations for growth”.
A spokesperson for the Conservatives told City PM that the changes to IHT policy on family firms – including farms – will “wreck entrepreneurialism and knee-cap British business,” adding that Labour is seeking to tax people “from cradle to beyond the grave.”
The lobby group Family Business UK (FBUK), which champions familial enterprise, has warned: “Well run, profitable companies will be left with no alternative but to hoist the ‘for sale’ sign rather than be taken on by the next generation of the family – creating a bonanza for investors looking to pick up assets on the cheap.
“The government has failed to understand the model of family ownership and the reason why these reliefs have been retained for almost 50 years. They are not loopholes and these changes simply pile additional taxes on family owned companies.”
Following the Budget, Basil Dixon, partner at law firm Payne Hicks Beach, warned that alongside Rachel Reeves’ changes to employers’ national insurance contributions (NICs), and Labour’s workers’ rights reforms, the IHT changes would be “hugely detrimental to hard working family businesses across the country”, warning they are “being taken for granted”.
While Toby Tallon, tax partner at professional services group Evelyn Partners, cautioned that launching restrictions on IHT business reliefs would “make it more costly to pass family firms on to the next generation”, risking the “viability of many long-standing companies – and the ability to continue employing loyal workforces and growth in local communities”.