A recent report conducted by CBI Economics reveals the potential consequences of the UK government's proposed changes to inheritance tax, which could pose a potential cost of up to £1.9 billion by 2030. The NFU suggests this should prompt the Treasury to reconsider its approach. Key impacts include a predicted decrease in turnover for the agriculture and horticulture sectors by approximately 12% due to changes in agricultural property relief (APR) and 11% due to business property relief (BPR). The sectors are likely to experience investment declines averaging 17%.
The report forecasts that capping APR at £1 million could lead to over 28,300 job losses within farming and related supply chains. According to NFU President Tom Bradshaw, the document clearly outlines "the catastrophic impact on family farming businesses across the UK." He emphasizes the necessity for the Treasury to reconsider its approach to prevent substantial cuts in investment and job losses. It is estimated that alterations to APR and BPR could result in 208,500 job losses by the Parliamentary term. Key sectors such as construction, manufacturing, and accommodation and food service activities are expected to undergo workforce reductions averaging around 11%.
APR changes are projected to cause a £1.4 billion drop in gross value added (GVA) over five years, with £0.6 billion directly affecting family farm activities. The implications include an average 7.5% turnover reduction and a 10.6% decline in employment numbers. NFU President Bradshaw strongly argues for the tax's reconsideration, labeling it "flawed, badly thought-out, and destructive," while suggesting a potential 'clawback' alternative.
Family Business UK CEO Neil Davy noted the widespread impact of the tax changes, stating, "No industry, sector, region or parliamentary constituency will be immune." He emphasized that parts of the government intent on fostering regional growth might inadvertently hinder progress through these changes. The report's findings show that over 60% of businesses may reduce investment by more than 20%, and around 23% have already reduced their workforce. Amidst these changes, the NFU remains open to collaboration, urging the Treasury to consider their proposed tax solutions while highlighting the necessity to prevent further socio-economic disruptions.
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