1. INTRODUCTION
CBI Economics was commissioned by Family Business UK (FBUK) to independently estimate the economic and fiscal impacts of the October 2024 Budget changes to Business Property Relief and Agricultural Property Relief for family businesses and farms, deepening the existing analysis conducted in a previous report published in January 2025. These changes are expected to affect the economy as a whole. To build a robust evidence base and highlight the behavioural changes expected amongst family-owned enterprises, CBI Economics built on the previous analysis through a larger-scale study of family businesses and farms. A number of UK trade associations supported FBUK and participated in the research. 1 Information garnered through this process informed the inputs to economic and fiscal modelling. Assessing the economic and fiscal impact of Autumn 2024 Budget changes to Business Property Relief and Agricultural Property Relief
Overview of the sector
Family businesses play a crucial role in the UK economy. According to research conducted by the Centre for Economics and Business Research for the Family Business Research Foundation, family businesses make up more than nine out of every 10 private sector firms in the UK and provide employment for nearly 16 million people; equivalent to 57% of total private sector employment in the UK. In 2023, family businesses generated £985 billion in Gross Value Added (GVA), equivalent to 59% of the total private sector contribution, and it is estimated that family businesses contributed £422 billion of taxation to the UK Exchequer through tax receipts. 2 It is important to note the regional differences in family ownership rates and how the impacts of changes to BPR and APR may be spread across the UK. For example, London has the lowest rate of family ownership in the UK despite being the second most populated region in the country. The Family Business Research Foundation report has estimated that family firms account for 97% and 96% of firms in the primary and construction sectors respectively, 3 underlining their significant importance.
Beyond their economic contributions, family businesses offer unique socio-economic benefits. Family businesses pride themselves on taking a long-term view as enduring stewards of their business and employees.
Purpose and need for the research
During the Autumn Budget 2024, the Government announced changes to inheritance tax reliefs available on the business and agricultural assets of family businesses and farms. The Government cited the change as one of many tough decision it had taken to plug the gap in the public finances. 4 It was amongst a wider package of tax rises that will increase the annual tax take by more than £41 billion by 2029-30. 5 From April 2026, full (100%) relief from inheritance tax on qualifying business and agricultural assets will be limited to the first £1 million of claims. For amounts exceeding this threshold, IHT will be charged at a reduced rate of 50%, resulting in an effective inheritance tax rate of 20%.
1 The names of these organisations are listed at the end of the report 2 Centre for Economics and Business Research (2025) State of the Nation: UK Family Business Sector in 2023; available at: State of the Nation: UK Family Business Sector in 2023 3 The ‘Primary’ classification refers to businesses in agriculture, forestry, and fishing, in mining and quarrying, in electricity, gas, steam and air conditioning supply, and in sewerage, waste management, and water supply.
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