Damage of crippling inheritance tax changes on South East revealed

The South East is set to shed 25,000 jobs and have billions of pounds wiped from its economy due to the crippling inheritance tax changes set to come in next year, new data shows.

A major survey into the impacts of the government's inheritance tax changes has painted a bleak picture of job losses and cancelled investment.

It has also found that cutting IHT reliefs for farmers and family businesses will hit the Treasury's own revenue – at odds with the government's desire to raise extra funds.

Constituency-level data has now been modelled from the survey, which was completed by more than 4,000 businesses and farms, revealing the damage set to be inflicted on towns and villages across the country.

In the South East, 25,500 jobs could be lost due to the changes, with a £2.1bn reduction in local Gross Value Added (GVA), a measure of business activity, including:

• 657 jobs and £63m in Milton Keynes Central
• 519 jobs and £32m in Dartford
• 473 jobs and £38m in Runnymede
• 419 jobs and £29m in Maidstone and Malling
• 355 jobs and £32m in Wycombe.

The Country Land and Business Association (CLA), which represents farmers and rural businesses, has been campaigning against the capping of vital inheritance tax reliefs, which is due to come into force in April 2026. The CLA has now written to rural Labour MPs highlighting the dire consequences and urging them to back the ‘clawback’ alternative.

Under the ‘clawback’ solution, proposed by industry bodies including the CLA, tax would apply at the full 40% rate on inherited assets sold within a certain time period post-death if the proceeds are not reinvested into those continuing businesses.

CLA South East Regional Director Tim Bamford said: “As this comprehensive report shows, tax revenue will fall, with hundreds of thousands of jobs lost in the process.

“The government’s case is collapsing under increasing evidence that shows these reforms will inflict lasting damage on farms and family businesses across the South East and beyond.

"But it’s not too late to protect these jobs and save economic damage, while still raising money for the Treasury. Now is the time to back the ‘clawback’ alternative, and we urge MPs to stand up for their constituencies by working with us and pushing the government to support this position.”

The study, which the CLA supported, looked into the economic and fiscal impacts of changes to both Agricultural Property Relief (APR) and Business Property Relief (BPR).

It was commissioned by Family Business UK and conducted by independent consultancy CBI Economics, and is the largest yet into how the family business and farming sectors will respond to measures announced in the autumn Budget.

Overall it found that more than 200,000 jobs could be lost during this Parliament, while the changes could produce a net fiscal loss of £1.9 billion for the Treasury and wipe £14.9bn from the economy.

Almost a quarter (23%) of family businesses and almost one in five family farms (17%) have cut jobs or paused recruitment since the Budget. The findings also reveal that more than half (55%) of family-owned businesses and just below half (49%) of family farms have paused or cancelled planned investments.