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Family businesses could face inheritance tax bills of more than £500,000, new analysis has found. Following Rachel Reeves’ tightening the rules on inheritance tax, businesses could be subject to an average death duty of £547,000, according to analysis by tax firm Saffery.
Rachel Reeves’ announced in her October Budget that both business property relief (BPR) and agricultural property relief (APR) tax exemptions would be tightened as of April 2026. Previously unlimited, it will be charged at 20% above a £1million threshold for farm and business estates. Zena Hanks of Saffery said: “These figures indicate just how hard the Chancellor’s reforms to BPR and APR could hit the estates of business owners.”
They added: “With property prices where they are, a small family-run corner shop in the South East could easily exceed the £1million limit and potentially trigger a five-figure inheritance tax charge on the owner’s estate.
“Family business owners and founders who have worked hard, sacrificed and taken risks to build something that generates economic growth and employment are justifiably frustrated.”
The Office for Budget Responsibility predicted that the changes would raise £500 million a year for the Treasury by 2027-28.
An extra 2,000 estates a year will pay inheritance tax following the change, according to HM Revenue & Customs (HMRC).
Last week, a group of MPs called for the new rules to be delayed by a year until April 2027, with one citing a “lack of adequate consultation”.
Alistair Carmichael MP, chairman of the select committee for environment, food and rural affairs, said: “The Government seems to be dismissing farmers’ concerns and ignoring the strength of feeling evidenced in the months of protests that saw tractors converge on Westminster and up and down the country.
“There has been a lack of adequate consultation. Policies affecting farmers have been announced without due consideration or explanation of their impact or their rationale.”
