UKH urges government to rethink inheritance tax reforms

UKHospitality (UKH) has called on the government to reconsider proposed reforms to inheritance tax that could devastate family-run hospitality businesses across the UK, looking to address both its Budget submission and evidence to the House of Lords Economic Affairs Finance Bill Sub-Committee inquiry on the issue. 

The trade body warns that changes to Business Property Relief (BPR) risk forcing the sale of viable businesses, undermining generational succession, weakening rural and coastal economies and reducing reinvestment and long-term tax receipts. 

Simon Collinson, director of Oak Taverns, comments: "Our business was set up in 1991 and is still currently owned by our parents, both now in their eighties. It is now operated by a second generation of me, my brother and sister. 

"We have invested heavily in freehold pubs over the years on mostly closed, failing and under-threat pubs in villages and market towns. We have given back to communities their local pub and created jobs in the process. Following the IHT rules, the focus is no longer on growth but trying to decide which of our great pubs we will have to sell to pay the tax bill," he adds. 

"No one ever bought a small- or medium-sized pub company to avoid inheritance tax by passing it down to another generation. We would urge the government to reconsider its reforms to BPR which would be devastating for many family-run hospitality businesses."

A grim outlook

Recent member survey data reveals that 47% of family-owned hospitality businesses expect to be directly affected, with 51% cutting back investment and a fifth anticipating being forced to sell up.

In response, UKH is calling for a pause and extension of consultation with full sector engagement, a delay to implementation until at least 2029, and preservation of the principles behind APR and BPR to safeguard productive capital and generational continuity. 

"These reforms are flawed in design, rushed in process and unfairly target small- and medium-sized family businesses," says Kate Nicholls, chair of UKH. "Without changes, many operators will be forced to sell assets in weak markets, with devastating consequences for jobs, investment and communities. 

"The principle behind BPR was to safeguard family-run businesses, but these changes sadly do the opposite. I urge the government to think again and reconsider these reforms."

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