Concerns are rising among UK family businesses as Labour considers scrapping inheritance tax relief. This potential policy change may impose a staggering £1.4bn annual burden, sparking fears of closures and job losses.
Family Business UK (FBUK) has voiced alarm, highlighting that over 3,000 family-run enterprises would face significantly higher inheritance tax bills each year if this relief were removed.
Impact on Family Businesses
The proposed removal of inheritance tax relief could be disastrous for family businesses. With an estimated £1.4bn saved annually through this relief, these businesses could face severe financial strain. Over 3,000 enterprises might encounter higher taxes, leading to potential closures and widespread job losses.
Calls for Government Assurance
The lack of clarity from Labour is causing significant anxiety among small businesses. With the election looming, the fear of increased inheritance tax as a potential revenue source for public services is growing.
Inheritance Tax Details
Recent reports indicate that Labour plans to raise £10bn by increasing capital gains tax and tightening inheritance tax reliefs. Labour has pledged not to raise income tax, National Insurance, VAT, and corporation tax, which together represent about three-quarters of the Treasury’s tax revenue.
Institute for Fiscal Studies’ Recommendations
However, Davy warned that eliminating business relief would hinder economic growth. Companies may need to set aside funds for future tax liabilities or potentially liquidate or sell the business upon the owner’s death to cover tax bills.
Economic Growth Concerns
Removing this relief would force businesses into difficult financial decisions, impacting their ability to invest and grow.
Severe Implications for Small Businesses
The possibility of scrapping inheritance tax relief has thrown the future stability of many UK family businesses into question.
The Broader Picture
Imposing a £1.4bn tax burden on these businesses could lead to significant economic disruptions, affecting jobs and community stability.
The potential removal of inheritance tax relief presents a grave concern for UK family businesses. With £1.4bn at stake, the economic stability and future growth of thousands of enterprises hang in the balance.
As the election nears, the call for clarity and assurances from Labour grows louder, reflecting the anxiety and uncertainty permeating the family business sector.