Family Business UK (FBUK), a lobby group for Britain’s family-owned companies, is pressing the government ahead of its forthcoming Budget to fully reverse 2024 inheritance-tax changes that limited Business Property Relief (BPR), according to the Financial Times. The rules took effect on 6 April 2026: a new £2.5 million combined allowance now applies to the value of business or agricultural property qualifying for 100 per cent relief, with 50 per cent relief on qualifying value above that, per an HM Revenue & Customs (HMRC) policy paper.
The changes reach a wide base of owners, not only high-profile farm estates. Family-owned companies account for more than nine in ten private businesses in the UK and employ almost 60 per cent of private-sector workers, according to the Family Business Research Foundation. That ownership base is not limited to UK residents: under GOV.UK’s own guidance, someone HMRC treats as based abroad still pays UK Inheritance Tax on UK-situated assets, and a stake in a UK-incorporated family company is normally treated as UK property. An overseas shareholder or family member holding equity in a UK family firm is therefore exposed to the same BPR cap as a UK-resident owner, even if the rest of their estate sits outside the UK tax net.
The relief limits were first announced by then-Chancellor Rachel Reeves in the 2024 Budget, with an initial £1 million cap on 100 per cent relief. The government later raised that to the current £2.5 million combined allowance for Business Property Relief and Agricultural Property Relief — transferable between spouses or civil partners, and extended to qualifying trusts as well — per the HMRC policy paper. A Family Business UK survey of members in the second quarter of 2026 found nearly two-thirds of companies with more than 50 employees reported a negative effect on investment and growth plans since the reform took hold.
Family Business UK’s Matthew Jaffa told the Financial Times that “a watered-down version of a poorly designed policy still remains a poorly designed policy,” and the group says it will keep campaigning for a full reversal ahead of the government’s forthcoming Budget. FBUK’s own estimate, reported by Traders Union, is that delayed investment and jobs that are never created could produce a net loss to public finances over the course of the current parliament — the group’s case for why it expects the Treasury to revisit the policy rather than leave it as is.
References
Financial Times – Inheritance tax toll is mounting on UK family companies / Traders Union – UK family businesses face inheritance tax pressure on investment and jobs / HM Revenue & Customs – Changes to agricultural property relief and business property relief / GOV.UK – How Inheritance Tax works: if you die when you are based outside the UK
