UK budget changes could result in 200,000 job cuts

Proposed changes to the budget could potentially lead to over 200,000 job losses in family-owned businesses across the UK. Economists have raised concerns that adjustments to inheritance tax rules will negatively impact family farms and businesses. Rachel Reeves, the Chancellor, is behind these tax changes which may result in a significant drop in employment and economic output. Specifically, it is estimated more than 208,000 jobs could be lost by the end of the current parliamentary term, and the country's economic productivity could decline by nearly £15 billion. Neil Davy, CEO of Family Business UK, expressed alarm over the situation. He noted that uncertainty in global politics and the UK economy was already pushing businesses to cut jobs and reduce investments. This trend threatens the future of many family-owned firms, which are crucial for local communities and food security. Research by Family Business UK, involving over 4,000 businesses and farms, found alarming responses to the recent budget. About 23% of family businesses and 17% of family farms reported job cuts or hiring freezes. Additionally, more than half of these businesses have either paused or canceled investment plans since the budget announcement. The new tax rules, effective from April 2026, will exempt the first £1 million of combined agricultural and business property assets from tax. However, above that threshold, an effective tax rate of 20% will apply. This change has drawn criticism and prompted calls for the government to reconsider its decisions. A government representative defended the budget, stating that it remains committed to supporting farmers. They highlighted a major investment of £5 billion for sustainable food production and reforms aimed at boosting profits for farmers. The spokesperson also emphasized that the majority of estates would not pay any inheritance tax under the new rules.