Implications of Changes to Inheritance Tax Reliefs on the Landscaping Industry

The recent correspondence from Family Business UK to the Environment, Food and Rural Affairs Committee highlights significant concerns regarding the government's proposed amendments to Inheritance Tax (IHT), specifically targeting Agricultural Property Relief (APR) and Business Property Relief (BPR).

Understanding APR and BPR

APR offers relief from IHT on the agricultural value of qualifying property, facilitating the transfer of farms and related businesses across generations without substantial tax burdens. BPR extends similar relief to other business assets, ensuring that family-owned enterprises can continue operations seamlessly after succession.

Potential Impact on the Landscaping Sector

The proposed changes to APR and BPR could have profound implications for the landscaping industry, particularly for family-owned businesses. Key concerns include:

• Increased Tax Liabilities: Landscaping firms often hold significant assets, including land, machinery, and equipment. Modifications to APR and BPR may result in higher IHT liabilities, compelling businesses to liquidate essential assets to meet tax obligations.
• Investment Constraints: Anticipation of increased tax burdens might deter family-owned landscaping companies from making crucial investments in technology, training, and expansion, potentially stunting industry growth and innovation.
• Employment Risks: Financial strains due to elevated tax liabilities could lead to workforce reductions, affecting employment within the sector and the broader rural economy.

Advocacy and Industry Response

Family Business UK has expressed deep concerns that these IHT changes threaten the continuity of family-owned enterprises, which are integral to the UK's economic fabric and community structure. They caution that businesses with assets exceeding £1 million now face an uncertain future, with potential repercussions including diminished investments, job losses, and reduced tax revenues for the government.

The organisation has urged the Environment, Food and Rural Affairs Committee to consider the ramifications of the proposed BPR changes comprehensively, recognising its critical role in business succession planning. They advocate for a thorough examination of the potential impacts on family-run businesses, including those within the landscaping sector, and have offered to provide detailed briefings and facilitate witness testimonies to inform the committee's deliberations.

Conclusion

As the government reviews APR and BPR, it is imperative for stakeholders within the landscaping industry to stay informed and engaged. Understanding the potential impacts of these tax changes is crucial for strategic planning and advocacy efforts. Collective action and dialogue with policymakers are essential to ensure that the unique needs and contributions of family-owned landscaping businesses are recognised and safeguarded.