Family manufacturers pushed towards foreign sale by inheritance tax raid

Tax reforms put £94bn manufacturing powerhouse at risk

More than one in five family-owned manufacturers are considering selling to an overseas buyer following changes to inheritance-tax relief. With £94 billion of economic activity and around one million jobs supported by these businesses, ministers risk turning a succession-tax policy into a damaging sell-off of British industry.

BUSINESS PROPERTY RELIEF REFORMS ARE HURTING

Family-owned manufacturers are squealing in pain and “Ministers must listen before more damage is done.” says Family Business UK

A recent report from Make UK and Bishop Fleming Chartered Accountants has delivered the clearest warning yet: reforms to Business Property Relief (BPR) are already damaging Britain’s family‑owned manufacturers, and risk undermining the Government’s own growth agenda.

Business Property Relief was reformed by tightening the qualifying criteria so that more family‑owned trading businesses risk losing relief, increasing tax exposure during succession and prompting earlier sales or restructuring. The reforms were announced as part of the Agricultural and Business Property Relief changes in the budget on 26 November 2025 and took taking effect from 6 April 2026. Most of the headlines concentrated on the effects on farmers and tractors in Whitehall, but this is showing clearly that family firms across the board are being hurt.

Family‑owned manufacturers are one of the UK’s greatest economic assets. They contribute £94 billion to the economy and support around one million jobs. The new research shows that the recent changes to BPR are forcing these firms to rethink succession, delay investment, and even consider selling up, and for many, the threat is existential.

The Impact

The family manufacturers are already reeling according to the stats:

• 78% are worried about the impact on succession planning

• 22% are considering selling to an overseas buyer

• 18% are considering a sale within the UK

Succession planning is the backbone of family manufacturing: the ability to pass a business from one generation to the next without destabilising jobs, investment or ownership. The reforms have introduced uncertainty, cost, and complexity at exactly the moment when manufacturers need stability to invest in new technology, skills and growth.

It’s the Economy, stupid

Family‑owned manufacturers:

• anchor regional economies

• invest for the long term

• reinvest profits locally

• provide stable employment

• support supply chains and apprenticeships

• drive innovation in engineering, food production, materials, and advanced manufacturing

Policies that push these firms towards forced restructuring or premature sale, especially to overseas buyers, risk hollowing out the UK’s industrial base.

This is the opposite of a growth strategy.

Consequences

The report highlights three immediate risks:

Delayed investment as manufacturers pause or cancel capital projects because they can’t plan ownership transitions with confidence.

Forced sales: the reforms create pressure to sell, not because the business is failing, but because the tax system makes family succession harder.

Loss of UK ownership: a fifth of firms are considering selling to overseas buyers. Once sold, these businesses rarely return to UK ownership and decisions about jobs, investment and production move offshore.

“Ministers Must Listen”

Family Business UK Chief Executive Neil Davy has warned that policies that force family manufacturers to delay investment, restructure or sell for tax reasons put their contribution at risk and undermine the Government’s growth agenda.

He is calling on Ministers to:

• review the reforms ahead of the Autumn Budget

• engage directly with family manufacturers

• protect long‑term ownership models

• ensure BPR supports, not penalises, succession

Fix this before more damage is done.

Growth is at Stake

The Government has repeatedly said it wants higher investment, stronger regional economies, more manufacturing, better productivity and long‑term growth

The BPR reforms cut across all of these goals and if family manufacturers are forced to sell, shrink or stall investment, the UK loses hugely from jobs and tax to long‑term industrial capability and becomes a competitiveness issue.

Make or Break

The Make UK/Bishop Fleming report is a wake‑up call. Family‑owned manufacturers are sounding the alarm now, not in five years’ time. The Government must act quickly to review the BPR reforms and protect family ownership.

If Britain wants a stronger manufacturing base, it cannot afford to push out the very businesses that have built it.