Sir James Dyson has launched a scathing attack on Chancellor Rachel Reeves’s inheritance tax changes, warning they will “fleece and decimate” family businesses while costing the Treasury billions in lost revenue.
The billionaire inventor accused the Labour government of “vindictiveness” in targeting smaller firms with her maiden Budget, which introduced £40 billion in tax rises.
Under the new measures, set to take effect in April 2024, farms and family businesses will lose their full exemption from inheritance tax. Instead, Business Property Relief and Agricultural Property Relief will be capped at £1 million, with assets above that threshold taxed at 20 per cent. While this is half the standard 40 per cent inheritance tax rate, the Treasury forecasts the changes will generate an extra £500 million annually by 2030.
Sir James, who owns 36,000 acres of farmland across England and is worth £20.8 billion, argued that the measures would destroy the very businesses that contribute the most to Britain’s economy. Writing in a letter to The Times, he said: “This is what Rachel Reeves will kill off with her Budget, which introduces a confiscation of 20 per cent of all family companies at every generation, based not on assets (as with farming) but on a much higher figure, a theoretical multiple of future profits.”
He added: “Furthermore, the 20 per cent will be 40 per cent because families will be forced to generate the tax payment via dividends, upon which more tax is levied. Why this vindictiveness only towards British families?”
Impact on Family Businesses
Sir James highlighted the vital role of family businesses, pointing out that they employ 14 million people in the UK and collectively pay £3 billion annually in taxes. He warned that Reeves’s tax raid would force the closure of many such businesses, resulting in job losses and a significant drop in tax revenue.
“Reeves will destroy both the family businesses themselves and a source of untold billions in tax revenue to raise a maximum of £500 million by 2030,” he said. “She is killing the geese that lay the golden eggs.”
Farmers have also expressed outrage, with many recently staging protests in Westminster. The National Farmers’ Union has warned that the cap on agricultural relief will disproportionately affect family-run farms, where the value of land and equipment far exceeds the £1 million threshold but cannot be easily liquidated to pay tax bills.
Treasury’s Defence
The Treasury has defended the changes, arguing that they target the wealthiest estates while still providing a generous system of relief. Speaking to the BBC, Reeves said: “In the most recent year of tax data, 40 per cent of the benefit of Agricultural Property Relief went to just 7 per cent of estates. Thirty-seven estates got more than £100 million of tax relief. That is not affordable and it is not fair.”
She added that couples living on farms would still enjoy effective tax relief of up to £3 million and that the new rules would discourage the super-wealthy from buying agricultural land simply to avoid taxes.
Criticism from Business Leaders
Dyson’s critique marks his latest attack on the Labour government. He previously described Reeves’s Budget as an “egregious act of self-harm” that would “kill entrepreneurship, snuff out wealth creation, and stunt growth.”
He also pointed out that private equity and publicly listed companies are not affected by these inheritance tax changes, arguing that British family businesses are unfairly targeted.
“It will be ordinary working people – through their jobs and their wages – and the Exchequer who will pay the price for the Chancellor’s ideologically driven attack on family businesses,” Sir James said.
The Wider Economic Context
The controversy comes amid increasing concerns about the migration of wealth out of the UK. According to analytics firm New World Wealth, Britain experienced a net loss of 10,800 millionaires to migration last year, a 157 per cent increase from 2023. Many of these individuals relocated to countries such as Italy and Switzerland, which offer more favourable tax regimes.
Reeves has attempted to stem the exodus by extending the temporary repatriation facility, which allows non-domiciled residents to bring money into the UK without punitive tax rates. She defended this move as a way to attract investment, saying: “We’re making some changes to one part of the way in which very wealthy people from abroad are taxed.”
Dyson’s Warning
Despite these reassurances, Sir James remains resolute in his criticism, warning that the measures will do more harm than good. “This Budget introduces a confiscation of 20 per cent of all family companies at every generation,” he said. “It will be ordinary working people and the Exchequer who pay the price for Reeves’s ideologically driven attack on family businesses.”
With the changes set to take effect in a matter of months, the debate over inheritance tax is sure to intensify, as business leaders, farmers, and economists weigh the long-term consequences of Reeves’s proposals.
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