Every region of the UK and sector of the economy will be affected by the government’s decision to change inheritance tax rules according to new research – but particular areas and industries will be harder hit.
From 6 April 2026, the full 100% inheritance tax relief for business property relief (BPR) and agricultural property relief (APR) will be limited to the first £1 million of combined agricultural and business property. Assets exceeding this threshold will only receive 50% relief.
In a poll of 4,000 businesses and farmers on the frontline, by the lobby group Family Business UK, as many as 60% said they will cut investment in their enterprises as a result of needing to cover a looming IHT bill, with significant job losses expected.
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For family businesses affected by the change to BPR, investment is likely to fall most across Yorkshire and the Humber (-17%) and the East of England (-17%) while job losses will be greatest (-10%) in parts of Scotland, the North West and North East of England.
For businesses and farms impacted by changes to APR, the steepest cuts to investment are expected in Northern Ireland, the Midlands and the North East of England (each -17%) while headcount could be reduced by between 10% and 12% across the North West and North East of England.
Parts of Cornwall and Aberdeenshire could be hardest hit by the changes as both areas are expected to see sharp falls in jobs and gross value added (GVA) – a measure of economic contribution – as a share of their local economies.
Five of the 10 potentially most badly affected Parliamentary Constituencies for job losses are in Cornwall including: St Austell and Newquay, North Cornwall, South East Cornwall, St Ives and Cambourne & Redruth.
Neil Davy, chief executive of 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.
“While parts of the 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.”
Impact of APR and BPR inheritance tax changes
Some family business owners have already reacted to the policy, which was announced in the Autumn Budget, by taking steps to cut costs to mitigate an approaching higher IHT bill.
Around a quarter (23%) have reduced headcount. At a national level, by the end of this Parliament, the changes could lead to 208,500 jobs losses from family businesses and across their supply chains, the research suggests.
Business restructuring is a prominent concern, with around one in five family businesses considering downsizing under both BPR and APR, with up to 12% contemplating a sale.
They have also cut community support, with 15% of BPR and 12% APR change affected businesses cutting charitable donations or community activities.
Family Business UK estimates changes to BPR and APR could lead to £14.86 billion less economic activity (GVA) – almost equivalent to the value of UK motor vehicle manufacturing (£15.7 billion GVA) – and a £1.87 billion net fiscal loss to the government.
Davy said: “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.
“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.”
The Treasury has been contacted for comment.
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