Immediately following the Budget in 2024, FBUK commissioned research to demonstrate the impact that changes to BPR could have on affected businesses and the wider economy. 6 To build on this research FBUK, supported by a consortium of trade associations, commissioned this report to deepen the evidence base and broaden the scope to include both BPR and APR. 4,147 family businesses and farms (with more than 25% of the business owned by one or more members of the same family) were captured by this survey, collecting insights on how they will behave and the measures they will take to mitigate the changes to BPR & APR. The Office for Budget Responsibility (OBR)’s static costing estimates that the changes to BPR and APR will raise £1,765 million over a four-year period but assigns the policy a ‘high’ uncertainty rating, stating: “the main driver of uncertainty is the behavioural response to the measure … this in turn adds uncertainty to the modelling of the behavioural responses”. The primary data in this analysis helps to fill the information gap identified by the OBR, providing compelling evidence to show how business owners will change their behaviour, and the cost of these changes to family businesses and farms, their suppliers, customers, employees, the UK economy and the country’s public finances. The significance of the negative impacts calls into question how well these policies align with the Government’s election manifesto, which emphasised the importance of sustained economic growth saying it’s “the only route to improving the prosperity of our country and the living standards of working people.” FBUK is clear that BPR and APR are not ‘loopholes’ or ’tax breaks’ for wealthy individuals, as they have been characterised. Rather, they are deliberate and well-designed tax policies that support a unique model of business ownership that delivers investment, growth and employment, incentivising family business owners to innovate, take risks, and future-proof their companies. Conversely, capping BPR and APR at £1 million will result in business owners having to extract cash from their business, or divest business assets to cover future IHT liabilities, thereby imposing an indirect tax on the business. Consequently, the policy change places UK family businesses at a competitive disadvantage by imposing increased cost, uncertainty and an additional business tax which is not faced by any other model of business when ownership changes.
Methodology
To assess the potential impact of the changes to BPR and APR, CBI Economics surveyed more than 4,200 businesses and farms likely to be affected between October 2024 and April 2030. Of these, 4,147 were identified as family-owned enterprises, with at least 25% of the estate held by family members. The survey focused on anticipated behavioural responses and economic impacts – specifically changes in investment, turnover, and headcount. These self-reported changes in turnover underpin the economy-wide modelling. The fiscal analysis incorporates not only projected IHT receipts, but also wider losses in tax revenue – including production and income taxes – from family businesses, their supply chains, and employees. Full survey details and methodology are provided in the appendix.
4 BBC (2024) Row over ‘black hole’ in public finances continues. [Available at: https://www.bbc.co.uk/news/articles/c9qljw7915yo (Accessed on: 05/11/2024)] 5 HM Treasury (2024) Autumn Budget 2024: Fixing the Foundations to Deliver Change 6 Family Business UK and CBI Economics (2025). Taxing Family Business Futures: The economic and fiscal implications of reform to Business Property Relief for UK family businesses. Available at: https://www.familybusinessuk.org/wp-content/uploads/2025/01/FBUK_BPR_HR.pdf
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