More than 200,000 jobs could be lost because of the government’s so-called tractor tax, according to new research.
The move would also cost the economy £14.9bn, according to a study by the independent consultancy CBI-Economics, which was commissioned by the group Family Business UK and looked at more than 4,000 businesses and farms across the country.
Nearly a quarter of family businesses – 23 per cent – and almost one in five family farms – 17 per cent – said they had cut jobs or halted recruitment since the planned tax was announced in the October budget.
Just under half of family farms – 49 per cent – said they have also paused or cancelled planned investments.
Ministers are ploughing ahead with their plan to make farms valued at £1m or more liable for 20 per cent inheritance tax, despite calls from supermarket giants including Tesco for a halt to the divisive policy.
The research estimates the tax hikes will see around 208,000 jobs lost by the time of the next election.
Neil Davy, the chief executive of Family Business UK, said: “Against a backdrop of huge uncertainty in global geopolitics and UK economic growth, these latest data show unequivocally the damage that is already being done to Britain’s family-owned businesses and farms and the wider economy.
“Ultimately, it will be the working people, and communities right across the country, who depend on family-owned businesses and farms who’ll pay the price.”
The policy suffered another blow last month when the Office for Budget Responsibility (OBR) warned it may raise less than the Treasury hopes, with the £500m-a year-revenue forecast given a “high” uncertainty rating and likely to fall after seven years as families use tax planning to avoid the charge.
The Treasury says with tax allowances, in reality, only farms worth £3m would be affected – which is 28 per cent of family farms. But official Defra figures appear to suggest as many as 66 per cent could be hit.
Ministers have defended the changes, saying that they had to take “difficult decisions” in the wake of what Labour says is a £22bn black hole in the public finances left by the last Tory government.
A government spokesperson said: “Our commitment to farmers remains steadfast. This government will invest £5 billion into farming over the next two years, the largest budget for sustainable food production in our country’s history. We are going further with reforms to boost profits for farmers by backing British produce and reforming planning rules on farms to support food production.”
They added: “Three-quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most people pay, and payments can be spread over 10 years, interest-free. This is a fair and balanced approach which helps fix the public services we all rely on.”
