UK rural businesses scale back investment amid inheritance tax fears

A survey of 700 rural family businesses conducted by the Country Land and Business Association (CLA) reveals that 89% of respondents have paused investment due to fears regarding inheritance tax. More than one-third of those surveyed are withholding projects valued at over £150,000.

To mitigate potential tax burdens, some business owners reported deliberately reducing the value of their enterprises by delaying machinery purchases, cancelling holiday home developments, abandoning crop expansions, and allowing buildings and land to deteriorate.

While the government maintains that an updated £2.5 million relief allowance will protect most family businesses, nearly 85% of respondents believe this threshold is insufficient given the rising costs of livestock, crops, and machinery. The CLA warned that the tax policy is forcing families to shrink businesses they have spent decades building, with nearly half of respondents stating they would need to sell at least 25% of their land to cover a potential tax bill.