Month: December 2025

FBUK welcomes increase in IHT threshold

Posted on by Martin Greig

Family Business UK has welcomed today’s announcement from government that the thresholds for both BPR and APR will be increased from £1m to £2.5m. The change means that the allowance for married couples will be increased to £5m.

The change follows the work done by FBUK, and other organisations, over the last 14 months to lobby for changes and amendments to the new rules which will come into effect in April 2026.

Commenting on the announcement, FBUK Chair Steve Rigby said:

This is a welcome step by the Government which will bring certainty and peace of mind to thousands of smaller family businesses and farms. It shows the Government has been prepared to listen to the economic and moral arguments that we and other organisations have made on the importance of these policies.

Family businesses and family farms are critical to the fabric of the UK’s economy and food production. For decades they have relied on BPR and APR to facilitate a smooth handover of the business when an owner dies. Raising the cap to £2.5m, or £5m for married couples, is the right thing to do to reinvigorate investment and growth among these smaller family businesses and farms.

Nevertheless, retaining the cap for businesses valued higher than this remains a material challenge and we look forward to continuing our work with government on solutions that will give them the confidence they need.

Cautious welcome for farming review

Posted on by Martin Greig

Family Business UK has given a cautious welcome to the Government’s review of farming profitability – conducted by the former NFU President, Baroness Minette Batters.

The review, which was commissioned earlier in 2025, makes 57 recommendations to government. For family-owned farms and businesses the core issue of changes to inheritance tax fell outside the scope of the review. Nevertheless, nearly every respondent cited the changes to IHT as the single biggest issue they faced causing concern about what may lie ahead.

Commenting on the report, Neil Davy, CEO FBUK said:

Like all companies, family-owned farms and businesses need confidence to invest and grow not just for today but for years, even decades into the future. But, the changes to inheritance tax have sapped the confidence of owners leaving many to question how they will plan for an uncertain future?

So, whilst we welcome the report by Lady Batters it is a missed opportunity, by government, to hear the genuine concerns of the millions of family farm and family business owners whose long-term prospects and long-term profitability are significantly impaired by changes to inheritance tax.

Our research remains the only impact assessment of this policy change – highlighting the economic and fiscal impact that are likely to result not just within the businesses and farms but across their supply chains and amongst the people whose livelihoods they support – 208,000 job losses, £15 billion less economic activity and a net tax loss to government of £1.9 billion.

Economic growth and robust food security are vital to this country. But this single policy change undermines both. Family Business UK and our Members remain open and keen to engage with government on amendments which can deliver these objectives whilst also protecting the millions of family-owned businesses and farms across the UK and give them back their confidence to invest for the future.

Interest Rate Cuts – December 2025

Posted on by Vanessa Barrett

Today’s cut in interest rates by the Bank of England is welcome news for family businesses, offering some relief after a prolonged period of high borrowing costs. However, inflation remains above the 2% target and unemployment is rising, with almost one million young people currently not in work, education or training.

These challenges are being compounded by the government’s changes to Inheritance Tax reliefs, which are undermining confidence and deterring family businesses from investing and taking on new staff at a time when the economy needs it most.

 

Finance Bill second reading: what you need to know

Posted on by Martin Greig

On Tuesday afternoon (16 December 2025), MPs in the House of Commons will debate and vote on the second reading of the Finance Bill – an important moment in the Bill’s journey through Parliament.

The second reading is the first substantive opportunity for MPs to debate the Bill as a whole and to decide whether it should proceed to the next stages of Parliamentary scrutiny. If a majority of MPs vote in favour, the Bill will move on to further stages where individual clauses can be examined and amended in greater detail.

Why this matters to family businesses

The Finance Bill gives legal effect to the Chancellor’s Autumn Budget proposals and contains a number of tax measures that will influence business planning in the years ahead. For family-owned businesses, changes to Inheritance Tax (IHT) and Business Property Relief (BPR) are the most significant.

What the second reading debate covers

At second reading, MPs will debate the overall principles and purpose of the Finance Bill, rather than individual measures or technical details. A treasury minister will open the debate, followed by speeches from opposition parties and backbench MPs. Crucially:

  • No amendments to the Bill can be made at second reading, so the vote is simply on whether the Bill should continue its passage through Parliament.
  • If the Bill passes, detailed examination and opportunities to propose changes will come at the committee and report stages in the New Year.

What happens next if the Bill passes?

Assuming a majority of MPs support the Bill at second reading:

  • It will enter the committee stage, where MPs can scrutinise individual clauses and propose amendments.
  • Following committee stage, the report stage offers further opportunities for changes to the Bill.
  • Finally, the Bill will return for a third reading before moving to the House of Lords.

The House of Commons rises for Christmas recess on 19 December so, any detailed scrutiny of the Bill will come in the New Year.

At the end of the second reading debate on Tuesday, the Government will set out the full timetable for the remaining stages of the Finance Bill, including key dates when crucial IHT legislation can be amended.

Is another rebellion on the cards?

In short no, not at this stage. Earlier in the month, Labour suffered a sizeable rebellion on Resolution 50 of the Finance Bill – the bit of legislation relating to the Government’s changes to IHT. We are seeing Labour MPs concerned about changes to IHT are increasingly speaking out – read FBUK’s analysis here.

Bills rarely fall at Second Reading, and so another rebellion on Tuesday is highly unlikely. However, MPs will have the opportunity to debate the broad principles of the Bill, including the government’s changes to BPR.

Write to your local MP

For family businesses concerned about the impact of new IHT rules, this means lobbying and engagement now is crucial to influencing the next stages.

This is your opportunity to write to your MP ahead of the debate on Tuesday. Download FBUK’s Finance Bill briefing for MPs here.

Find out who your local MP is here.