Sweeping changes to inheritance tax rules coudl destroy family businesses, an entrepreneur has warned.

alex Lovén, who runs a building adn restoration company in Wales, said the government’s recent announcement to abolish the tax relief on multiple business properties was a “hammer blow”.

the relief, known as Business Property Relief (BPR), currently allows entrepreneurs to pass on business assets without paying the standard 40% inheritance tax.

The government argues the change, which will come into effect in April 2024, is needed to simplify the tax system and ensure it is indeed fair. however, critics say it will penalise those who have worked hard to build successful businesses.”This is going to be devastating for a lot of family firms,” said Mr Lovén, whose company specialises in restoring historic buildings.”We’ve spent years building up this business, and we had plans to expand and create more jobs. but now, we’re having to reconsider everything.

“The new rules mean that a significant portion of the value of our business will be subject to inheritance tax, which could force us to sell assets or even relocate overseas.”

Mr Lovén said the changes would particularly effect businesses that own multiple properties, such as farms, hotels, or pubs.

“These businesses often have a lot of their wealth tied up in property, and they rely on BPR to ensure that their families can continue to run them after they’re gone.”

The Contry Land and business Association (CLA) has also warned that the changes could have a “chilling effect” on investment in rural businesses.

“The government needs to reconsider this policy,” said CLA president Mark Tufnell. “It risks undermining the very businesses that are the backbone of the rural economy.”

The Treasury said it was committed to supporting family businesses, but that the current rules were too complex and open to abuse.

“We are simplifying the inheritance tax system to make it fairer and more transparent,” a spokesperson said.

“The vast majority of estates will continue to pay no inheritance tax, and we are introducing new reliefs to support those who are genuinely trying to build and grow their businesses.”

However, Mr Lovén remains unconvinced.”This isn’t about simplification,” he said. “This is about raising revenue, and its going to come at the expense of family businesses like mine.”

Inheritance Tax Changes Spark Fears for UK Businesses

net World Sports,a major investor in Wrexham,is warning that new inheritance tax rules could force businesses to relocate or drastically alter their growth plans. The company’s founder, Mr Lovén, described the amount of tax being introduced as “so enormous” it could threaten the future of family-owned enterprises.

He argues the changes shift the focus from business growth to defending against asset seizure, contradicting government calls for investment and potentially removing the long-term economic benefits provided by multi-generational businesses. Net World Sports, established in 2009 and now employing hundreds of people, currently pays around £1m in business rates.

Mr Lovén suggests entrepreneurs may consider relocating,stating,”Why would you bother to do it in the UK? We’re now seeing our attention turn to America as that is a place where they won’t take it all from you.” He questions the logic of penalising success, arguing that such policies hinder economic progress. “We’re the biggest investor into Wrexham, but what is the point if success is penalised? Your country, your economy will never go forward.”

What are the new inheritance tax rules?

Business Property Relief Changes Discourage Investment

Changes to Business Property Relief (BPR) are causing some business owners to reconsider expansion plans, according to tax professionals. Andrew Evans, a tax partner at law firm Geldards, describes the impact as “life-changing” for owners.

One client, having saved £15 million to invest in a new business direction, has decided against proceeding due to the altered tax landscape.

Evans warns that many owners remain unaware of the implications, noting an “ostrich mentality” prevalent among small and medium-sized firms. He strongly advises business owners to seek professional advice and create a will.

The Treasury anticipates these changes will generate £520 million annually. However, Evans questions whether this revenue gain justifies the potential hindrance to economic growth, stating, “Rather than spend money growing the business, owners will save money to pay a tax bill.” He expresses disappointment, arguing the changes contradict the Chancellor’s stated support for growth.

HM Treasury defends its position, highlighting its commitment to a pro-business habitat with a 25% corporation tax rate (the lowest in the G7), business rate reforms in england, and recent trade deals with the US, EU, and India. They also point to recent interest rate cuts benefiting businesses.

Treasury data reveals that 53% of Business Property Relief,totaling £533 million,currently benefits only 158 estates. The reforms aim to redirect these funds towards essential public services.