The BMF (Builders Merchants Federation), is urging the government to reverse proposed changes to Business Property Relief (BPR) and has reiterated concern that the measures may have the unintended consequence of wiping out what they were aiming to achieve.
‘Taxing Futures,’ a new report from Family Business UK (FBUK), sets out regional and local impacts of the policy, highlighting the East of England as one of the regions likely to be hardest hit.
Ben Chandler, Finance Director at Chandler Material Supplies in Essex is BMF Regional Chair for the East of England. He said: “The Business Property Tax changes outlined by the government that affect inheritance tax are another nail in the coffin for family-owned businesses in the East of England.
“There are many family-run Builders Merchants in the region that support thousands of local trades people who will be affected by this change.
“Most of the capital invested in these businesses is used in equipment, vehicles, stock and staffing. It is not money sitting in the bank.
“These changes will force these businesses to remove this investment to turn it into cash to pay a future inheritance tax bill, reducing their ability to service and supply the tradespeople who rely on them, and reducing the number of local jobs they can offer to people.
“This change will speed up the demise and disbanding of family-led businesses in the East of England, forcing them to shrink.
“In reality it will lead to more of these businesses being sold to national or international owners where the tax isn’t due so won’t be collected for the public purse anyway.
“At a time when the government is trying to actively attract investment in UK business, this will likely have the exact opposite effect. I would strongly urge a rethink before irreversible damage is caused to the UK economy.”
According to the Centre for Economics and Business Research, family firms account for 96% of firms in the construction sector, which encompasses the building materials supply chain.
The ‘Taxing Futures’ report was commissioned by FBUK, supported by a consortium of trade associations, including BMF, and conducted independently by CBI Economics.
It captures insights from 4,147 family businesses and farms on the measures planned to mitigate changes to Business Property Relief and Agricultural Property Relief.
A copy of the report is available to download here
BMF CEO John Newcomb said: “The building materials sector is absolutely critical to the lifeblood of the UK economy, but we are hearing across the industry that the changes in inheritance taxation could limit the future of the sector, with many private and family businesses across our membership reporting back that the impact of Business Property Relief will damage enterprise.
“Most BMF members are now reviewing their sales and trading forecasts for the next two years and looking at investment decisions, stock levels and staffing numbers.
“We have previously urged government to ensure these measures do not have the unintended consequence of wiping out what they were aiming to achieve.
“Since Business Property Relief was introduced by a Labour government in 1976, it has protected numerous private, family-owned enterprises from being sold or broken up to pay Inheritance Tax.
“We urge the PM, Chancellor and Ministers to review the situation and think again about the proposals.”