Government climbdown on inheritance tax for family firms

Newsletter issue – February 2026

Chancellor Rachel Reeves recently reversed part of a planned inheritance tax change affecting family-owned businesses and farms. The threshold at which 20% inheritance tax applies was raised from £1m to £2.5m (or £5m for married couples). She is facing mounting pressure to reconsider the policy entirely.

Campaigners argue that even with the higher threshold, the policy still threatens the survival of many family firms. Paul Andrews of Family Business United called for the tax raid to be scrapped entirely, describing the policy as an "ill-thought-out tax grab." He emphasised that family businesses are vital to local communities and economic growth.

Critics say the government should be supporting growth, not burdening family-run companies. The proposed changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) were expected to raise up to £1.8bn for the Treasury. But new analysis by CBI Economics suggests the policy will instead cost the Treasury around £1.9bn by 2030.