Businesses should be encouraged, not taxed out of existence
Businesses should be encouraged, not taxed out of existence
Telegraph ViewMon, October 19, 2026 at 5:10 PM UTC
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The Chancellor has drawn up plans for a tax raid on family businesses ahead of the Budget - Henry Nicholls/AFP
As befits a government containing not a single Cabinet minister who has ever run a business, the Budget next month is expected to pile even more misery on those who do. John Healey, the Chancellor of the Exchequer, is said to have drawn up plans for a tax raid on family businesses. He is considering proposals to levy income tax when business owners hand their company down to the next generation, potentially almost doubling the bill.
At present, transfers can be structured so they attract capital gains tax, which is charged at a lower rate than income tax.Small family businesses are the backbone of the economy. They employ millions of people who pay for the public services on which Labour seeks to lavish even more. But a combination of high taxes and NICs, crushing regulation, increased minimum wages, new workplace rights, excessive energy costs and business rates is placing intolerable pressure on the most productive sector of the economy.
Many are either laying off staff or not taking on new recruits while struggling to make a living. The previous chancellor, Rachel Reeves, drew family businesses into the clutches of inheritance tax (IHT) which could previously be avoided when handed down the generations. The loudest protests came from family farms, but her raid affected all family-owned companies, which account for more than nine out of 10 of all private businesses in the UK.
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Even a partial U-turn that raised the threshold at which IHT would be levied from £1m of assets to £2.5m, still left many vulnerable.
This latest proposal would add insult to injury and break many family firms. Why should anyone establish a business if much of what they build up is purloined by the taxman?
Family companies have to set aside cash to meet potential tax obligations, constraining their options for expansion and encouraging sales to private equity. These were misguided changes whose damage Mr Healey seems determined to compound with the latest proposals.
Not only is this vindictive but also inimical to what is supposedly the driving force of this Labour Government, namely to generate growth. Family businesses should be encouraged, not taxed out of existence.
Source: “AOL Money”
