More than 17,000 jobs could go across the East Midlands as the owners of family businesses and farms respond to changes in inheritance tax announced in last year’s Budget.
New research from Family Business UK (FBUK), supported by 32 trade associations and conducted by CBI Economics, reveals the full impact of changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) on the East Midlands economy.
It shows that 17,183 FTE jobs could be lost across the region, a reduction of more than 8.5% driven by the decision of business owners to cut investment by more than 16%. The cuts will be felt directly in businesses and farms, and across their supply chains reducing activity and turnover.
The research suggests that across the East Midlands businesses affected by BPR could see turnover fall by 10.2% and those affected by APR by 11.7% – putting the region amongst the worst affected across the UK. Overall, the loss of jobs and investment could cut economic activity (GVA) across the East Midlands by more than £1 billion (£1.068bn).
Neil Davy, CEO, Family Business UK, said: “This latest research shows just how far-reaching, and immediate, the impact of these policy changes is. No industry, sector, region or parliamentary constituency will be immune.
“In construction, services, manufacturing, tourism, transport, agriculture and horticulture, family business owners are responding to the changes to BPR and APR by tearing up long-term plans to invest in their businesses, their employees and the communities in which they are based.
“While parts of government are looking at how to boost regional growth and create opportunities in every sector of the economy, this research shows how changes to BPR and APR will achieve the exact opposite.
“Within our diverse and rapidly changing economy, family business owners have been building Britain for generations. If they are to continue to do so, with confidence in the future, the Government must urgently reconsider these policy changes.”
Steve Rigby, chair of FBUK and co-CEO of Midlands-based Rigby Group, said: “Without doubt these tax changes will hit UK businesses hard, particularly in the Midlands. We are at the eleventh hour, but it is still not too late for the Government to reconsider solutions that would generate tax without threatening the future growth prospects of family businesses.
“More than half of family-owned businesses have reported halting or cancelling investments, with many now contemplating the sale of their firms to mitigate the financial burden.
“Business in the Midlands are already facing many challenges and it is no wonder it is one of the worst affected by these changes. We hope that the Government will act on Family Business UK’s important findings.”
Family businesses play a vital role in the economy accounting for nine out of every ten private sector firms. BPR and APR are critical to family businesses. The changes announced in the Budget mean that from April 2026 family business owners will have to pay 20% inheritance tax on their business and agricultural assets when they die.
Since the Government announced the changes, family business owners have taken immediate steps to mitigate the cost of the policy change. At a UK level, the research shows:
- Over 60% of businesses anticipate reducing investment by more than 20%, with average investment declines of 15.8% (APR) and 15.5% (BPR).
- Around a quarter (23%) have reduced headcount due to BPR and APR changes.
- Business restructuring is a growing concern: Around 1 in 5 are considering downsizing under both BPR and APR, with up to 12% contemplating a sale.
- Reduced community support: 15% (BPR) and 12% (APR) of businesses have cut charitable donations or community activities, which will impact vital local initiatives.
Across the UK, by 2030, the changes to BPR and APR could lead to:
- 208,500 jobs losses from family businesses and across their supply chains
- £14.86 billion less economic activity (GVA) – almost equivalent to the value of UK motor vehicle manufacturing (£15.7bn GVA)
- a £1.87 billion net fiscal loss to government
Family businesses operate in every sector of the economy and the latest research demonstrates the widespread impact of the change to BPR and APR. Sectors expected to see the steepest cuts to investment include Accommodation and Food Services (-17%), Construction (-17%), Agriculture and Horticulture (-17%), Manufacturing (-16%), Real Estate activities (-16%), Retail and Wholesale; repair of motor vehicles (-15%).
For those affected by APR, investment is likely to fall most in agriculture and horticulture, with average cuts of around 17%, Accommodation and Food Services (-16%) and Real Estate activities (-16%).
