Unforeseen job losses forecasted at 200,000 due to Reeves' inheritance tax crackdown
Revised Article:
Get ready for a potential job crisis in the UK's business and agricultural sectors, as the government's latest inheritance tax overhaul could put over 200,000 jobs at risk, according to a recent study by CBI Economics.
Chancellor Rachel Reeves made some major revisions to Business Property Relief (BPR) and Agricultural Property Relief (APR) in last year's Autumn Budget, impacting numerous family-owned businesses and farms across the UK.
The study indicates that a staggering 208,500 full-time jobs might vanish by April 2030 due to this policy shake-up. The anticipated tax revenue gain of around £1.8bn over the next five years comes at a net fiscal cost of £1.9bn.
Furthermore, CBI Economics revealed that the tax changes would result in a £14.8bn loss to the overall economy.
This year's Autumn Budget changes capped the full inheritance tax relief at £1m for combined qualifying agricultural and business properties. Anything above this threshold will now only receive half the relief, leading to increased tax bills for heirs of larger businesses.
The looming death tax on farms is causing quite a stir. Responding to the research, shadow business secretary Andrew Griffith condemned the government's plan as built on "dubious arithmetic and a flagrant violation of election promises." He emphasized that the impact on family-owned businesses will be "staggering," with 200,000 jobs hanging in the balance.
According to the survey, nearly half of family businesses plan to reduce headcount, with an average decline of nine percent in employment. Furthermore, around 50 percent of these businesses expect to postpone or cancel planned investments, resulting in a total decrease of 16 percent in investments.
The agriculture sector is expected to experience the steepest decrease in investments, averaging a 17 percent decline, according to CBI Economics.
However, the Treasury maintains that their reforms will ensure three-quarters of estates pay no inheritance tax at all, while the remaining quarter pays half the inheritance tax most estates usually do—and payments can be spread over ten years, interest-free.
The government's strategy for change includes capping corporation tax, reforming planning, establishing a National Wealth Fund, and creating pension megafunds. This plan aims to boost investments, stimulate economic growth, and improve living standards nationwide.
The changes to Business Property Relief and Agricultural Property Relief in the Autumn Budget could potentially disrupt the finance sector, as the increased tax bills for heirs of larger businesses might affect the flow of investments in property and business. Moreover, the anticipated job losses in the UK's business and agricultural sectors due to these tax changes could reach a staggering 208,500 by April 2030, impacting the overall economy with a loss of £14.8bn.
