Labour's inheritance tax changes for family businesses and farms will cost the UK economy 208,500 jobs and £14.9billion in economic activity by 2030, a bombshell report has warned.
The research, conducted by CBI Economics for Family Business UK, surveyed more than 4,000 family businesses and farms across the country.
The study revealed that changes to inheritance tax reliefs are already forcing businesses to take drastic measures to prepare for the looming tax burden.
The impact is already being felt across the sector, with businesses taking immediate action to mitigate the financial uncertainty.
Nearly a quarter of family businesses have already reduced their workforce since the Budget announcement, according to the study. The research found that 17 per cent of family farms have also cut jobs in response to the tax changes.
Over half of family-owned organisations have either paused or cancelled planned investments. Nearly one in ten family firms have already sold up entirely to cover the looming tax bill. The study also revealed that 23 per cent of businesses have slashed their headcount since the Budget.
The tax changes involve new restrictions on inheritance tax relief for agricultural land and property, and family-run businesses
GBNEWS/GETTYNearly half of family farms (49 per cent) have paused or cancelled investment plans. This figure rises to 55 per cent among family businesses more broadly.
The research also found that over one in ten (12 per cent) family businesses are planning to sell their entire organisations to cover future tax burdens.
As the April 2026 deadline for the tax changes approaches, further cutbacks are anticipated across the sector. The tax changes involve new restrictions on inheritance tax relief for agricultural land and property, and family-run businesses.
Business Property Relief (BPR), which previously allowed family businesses to pass assets down generations without restrictive tax burdens, will now be capped at £ million. Agricultural Property Relief (APR), which has long supported generational continuity within the farming sector, is also being reformed.
These reforms will further limit tax exemptions on agricultural assets. The changes were unveiled as part of the government's broader effort to raise revenue.
Despite the government's expectations that these reforms would boost public finances, the report suggests they will backfire financially.
The study projects a net fiscal loss to the Treasury of £1.9billion due to the tax changes. This undermines the government's own revenue expectations from the policy.
The Office for Budget Responsibility has assigned a "high" uncertainty rating to the policy. The OBR was unsure how family farms and businesses would react to the changes. The overall tax take could ultimately decline because of job losses and reduced economic activity.
Neil Davy, chief executive of Family Business UK, has urged the Government to reconsider its approach.
"At a time of economic fragility, these tax changes are forcing family-run businesses - the backbone of the UK economy - into difficult decisions that will hurt investment, jobs, and growth," he warned.
Davy added: "The evidence is clear: these policies are already damaging confidence, pushing businesses to sell up, cut back, or shut down entirely."
"Ultimately, it will be the working people, and communities right across the country, who depend on family-owned businesses and farms who'll pay the price."
