An insider’s view on the Budget
Adam Smith Managing Director of Granville Park Partners Former Chief of Staff to the Chancellor of the Exchequer
implications of such changes. Spreadsheets simply cannot quantify that sort of thing. That final reason is why the Chancellor I worked for took a different view to Rachel Reeves. Although presented with the same advice, Jeremy Hunt was ultimately not persuaded to touch BPR, even though he was interested in closing some reliefs in order to fund a cut in tax. In Rachel Reeves, you have a Chancellor who needed revenue, with no private sector experience, and presented with a policy that only affects a small number of people. Add in the fact that having floated abolishing it completely she may have thought that restricting it would be seen as a win. I can see how the decision was made even if I disagree with it. So, is there a ray of hope? The good news is that the decision is not due to come into force until April 2026. This gives plenty of time to marshal troops and shape arguments.
In the last government I was the Chancellor’s Chief of Staff for two Budgets and two Autumn Statements. These included the repair job that was carried out in the Autumn of 2022 following the mini-budget and the one a year later that was the biggest tax cutting fiscal event since Nigel Lawson. In just under two years, I saw most of the policy options that were no doubt put to Rachel Reeves ahead of her first Budget. Amongst these included the disastrous option to effectively abolish Business Property Relief as we know it. Given the damaging consequences this decision will have for family businesses up and down the country, their employees, the communities they serve and the economy as a whole, it is worth understanding why this is something that was put to Chancellors of both political colours, and why this government chose to implement it. Understanding the motivations behind a move that will seem baffling to anyone who actually runs a family business can help build a path to challenge it effectively. Firstly, Treasury officials do not really like tax reliefs. The very fact they are routinely described as ‘loopholes’ is designed to set the tone for getting rid of them. The basic economic principle behind this position is the view that a tax system should be as simple as possible, with a broad tax base paying as low a rate as is deemed necessary. Secondly, they particularly dislike any reliefs that relatively few people or businesses make use of (on paper at least). That is why the Budget documents point out that the changes announced to BPR and APR will “only affect around 2,000 estates each year”.
In my view, the focus should be on whether the change really will raise the money the Treasury says it will and demonstrate to the Treasury just how many – and how badly - people will in fact be affected.
Thirdly, unless you or someone in your family has run a business it is difficult to understand the behavioural
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