Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of the proposed changes to Business Property Relief on family-owned manufacturing businesses.

The Government believes its reforms to agricultural property relief and business property relief from 6 April 2026 get the balance right between supporting farms and businesses, and fixing the public finances. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992. Where inheritance tax is due, those liable for a charge can pay any liability on the relevant assets over 10 annual instalments, interest-free.

The Government has set out that around 1,500 estates across the UK only claiming business property relief are expected to pay more inheritance tax in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those estates only holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.

The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The independent OBR certified this costing at Autumn Budget 2024 and it does not expect the reforms to have a significant macroeconomic impact.