House of Commons · Westminster Hall
03 June 2025 · 10 other contributors · 4,247 words
Opened by Susan Murray Lib Dem Mid Dunbartonshire
Responding minister: James Murray
Summarised by AI from the official record, so it can contain mistakes.
Susan Murray raised concerns about inheritance tax: family-owned businesses in Westminster Hall. A government minister responded.
Key points
Key requests to Government
The proposed changes to business property relief will lose the Government nearly £1.9 billion, according to the Confederation of British Industry estimates. Before implementing these changes, the Government should conduct a consultation that assesses their impact on family businesses and local communities.
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
Family-owned businesses are facing significant challenges such as national insurance increases, which threaten growth and investment. According to the Fraser of Allander Institute, many businesses are scaling back workforce expansion plans. The Centre for Economics and Business Research found that family-owned businesses provide employment for nearly 16 million people and contribute more than £200 billion in taxes annually.
Asked whether changes to inheritance tax should be carefully shaped to support local businesses and farms in planning for the future.
She highlights a Family Business UK report showing potential losses in her constituency and across the United Kingdom due to the proposed changes, advocating for the scrapping of the 'death tax'.
The research published by Family Business UK points to a reduction of £18 million in gross value added and 286 full-time equivalent jobs due to inheritance tax reforms.
The hon. Member for Dunfermline and Dollar suggests allowing businesses to pay inheritance tax if passed on to another family member, ensuring the tax liability is met without impacting future generations.
J. W. Lees and Joseph Holt are examples of family businesses that contribute significantly to local communities in the hon. Member's constituency, highlighting the importance of a consultation on proposed changes.
Taxing businesses at 20% based on their value at the owner's death does not account for the personal input of the business owner, potentially destroying the farming sector.
He questions whether HMRC's guidance for valuations of companies reflects the actual value of assets, pointing out that current valuations often differ from an asset’s market value.
Recognises the need for the Government to raise funds but suggests family businesses have alternative proposals. Asks if the Minister would meet and consult with these businesses.
It is unclear why the Government focuses on family farms despite offers from the National Farmers Union for compromises to ensure that these businesses continue to be run by families.
Questioned why the Government do not consider taxing large digital multinational corporations trading in the UK to raise extra revenue instead of implementing measures that affect small businesses.
Government Response
James MurrayThe Parliamentary Under-Secretary of State for Housing, Communities and Local Government
Explained that the full unlimited relief introduced in 1992 has become unfair and unsustainable. Mentioned that under the reformed system, estates will still benefit from 100% relief on the first £1 million of combined assets from April 2026, with an uncapped 50% relief on further assets. Highlighted that inheritance tax will be paid at a reduced effective rate of up to 20%. Discussed the digital services tax and support for OECD's two-pillar solution.