Latest IHT report paints ‘catastrophic’ picture of family farming businesses
2nd June 2025
Farming boss said that report into the impacts of the inheritance tax changes must serve as a “wake-up call” to Treasury; otherwise, the industry will face major cuts to investment and experience significant job losses.
The new report by Family Businesses UK (FBUK) into the impacts of the inheritance tax changes announced at the Budget was supported by 32 trade associations and is the most comprehensive analysis yet of how family business owners are likely to respond to the policy change.
The analysis, which has involved 4,174 businesses and farms, has shown that for family businesses affected by the change to BPR, investment is likely to fall most across Yorkshire and the Humber (-17%) and the East of England (-17%), while job losses will be greatest (-10%) in parts of Scotland, the North West and North East of England.
For businesses and farms impacted by changes to APR, the steepest cuts to investment are expected in Northern Ireland, the Midlands and the North East of England (-17%) while headcount could be reduced by between 10% and 12% across the North West and North East of England.
Parts of Cornwall and Aberdeenshire could be hardest hit by the changes, as both areas are expected to see sharp falls in jobs and GVA as a share of their local economies, the independent consultancy arm of the CBI has confirmed.
Key findings
The key findings of the review has covered that:
- Over 60% of businesses anticipate reducing investment by more than 20%, with average investment declines of 15.8% (APR) and 15.5% (BPR).
- Around a quarter (23%) have reduced headcount due to BPR and APR changes.
- Business restructuring is a growing concern: around one in five are considering downsizing under both BPR and APR, with up to 12% contemplating a sale.
- Reduced community support: 15% (BPR) and 12% (APR) of businesses have cut charitable donations or community activities, which will impact vital local initiatives.
By the end of this Parliament, the research shows that changes to BPR and APR could lead to:
- 208,500 job losses from family businesses and across their supply chains.
- £14.86 billion less economic activity (GVA) – almost equivalent to the value of UK motor vehicle manufacturing (£15.7bn GVA).
- a £1.87 billion net fiscal loss to government.
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‘It is not too late for Treasury ministers to change direction’
NFU president Tom Bradshaw said that FBUK’s new report shows only too clearly the catastrophic impacts on family farming businesses across the UK of this government’s “punitive” family farm tax. “This report must serve as a wake-up call to Treasury, or we face major cuts to investment and significant job losses.
“FBUK is the latest in a long line of respected organisations and bodies to call out this tax for what it is – flawed, badly thought-out, and destructive. We want to be a constructive partner. We understand only too well the fiscal pressures and objectives that need to be met.
“We urge Treasury to review our offered solution in the form of a clawback policy, where the full 40% tax would be paid when inherited assets are sold.”
Mr Bradshaw added that it is not too late for Treasury ministers to listen, to do the right thing, and change direction for the sake of farming and the wider economy.
“Acting now would also remove the abhorrent untold human impacts which we have warned about and are tragically starting to come to light,” he concluded.
Neil Davy, CEO of Family Business UK, added that no industry, sector, region or parliamentary constituency will be immune to the impacts of IHT changes.
“While parts of government are looking at how to boost regional growth and create opportunities in every sector of the economy, this research shows how changes to BPR and APR will achieve the exact opposite.”
“Within our diverse and rapidly changing economy, family business owners have been building Britain for generations. If they are to continue to do so, with confidence in the future, the government must urgently reconsider these policy changes,” he continued.
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