Inheritance tax changes will stifle entrepreneurship, says developer

The founder of one of Britain’s biggest housebuilders has expressed fears that Labour’s reforms to inheritance tax will stifle entrepreneurship.
Andy Hill, the chief executive of Hill Group, said the changes could mean that his sons Greg and Tom “would have to find the best part of £100 million” to take on the family business, adding: “They’ve got no chance.”
“I think at some point they will change it back,” he said, “I don’t think it’s been thought through.”
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Sir James Wates, a director and former chairman of construction firm Wates Group, called the move “potentially seismic”. The company employs 6,000 people and he is part of the fourth generation of his family to run the company.
He said business property relief and agricultural property relief were “very symbiotic” and that “it goes to the heart of all that is good about business being attacked. These are businesses that take a long-term view on life: farms and family businesses. They look for good stewardship and to hand on to future generations. They have great pride in the communities in which they operate. And this puts all of that at risk.”
Wates, a former chairman of the Construction Industry Training Board, which helps young people gain the skills they need to enter the industry, added that “in extremis businesses will be sold”.
“People will say what is the point of carrying on. Do I want to hand on this poisoned legacy to future generations? It makes it ripe and fair game for overseas investors to come in and pick up very good businesses on the cheap because the aspiration goes. I think that is awful.”
Hill is the latest entrepreneur to speak out after Sir James Dyson told The Times that the budget was “spiteful” and called the new tax regime an “ignorant swipe at aspiration”.
Peter Done, the co-founder of the bookmaker Betfred, said: “There’s no upside in complaining about the tax hikes that were introduced. What’s done is done and we can’t change that.”
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Done, the managing director of ­Peninsula, an employment law, HR and health and safety advice specialist, said: “However, it is vital that the government spend this additional money wisely and put it back into business to help drive forward growth and investment.
“The biggest boost this government could give UK business is to reduce corporation tax, bringing it in line with Irish rates. It’s a guaranteed, simple way to boost the economy. If corporation tax is reduced, it will encourage international businesses to come here, and established UK businesses will have the funds to invest in their infrastructure.”
The budget tightened up inheritance tax relief on business properties, so family businesses passing on assets worth more than £1 million will be charged 20 per cent from August 2026. This will raise £520 million by 2029-30 according to the Office for Budget Responsibility.
Dyson labelled this new measure a “Family Death Tax, levied each time a family business passes a generation”.
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Previously, companies were able to use “business relief” to qualify for ­either 50 per cent or complete freedom from inheritance tax, if the deceased owned the business or asset for at least two years before they died.
Hill founded Hill Group in 1999 working out of a lock-up in Dagenham, east London. It is one of Britain’s biggest developers with revenues of £1.15 billion last year, during which it built 2,886 homes, mostly in East ­Anglia and southeast England.
He and his wife own 75 per cent of the business; the remaining 25 per cent is owned by an employee benefit trust. Hill said: “[The changes] destroy all the things the government should be ­encouraging people to do.
“My son contacted me [after the budget] and said, ‘I think we’ve got a problem here’. It’s a family business and the plan was never to sell. I voted Labour mainly because the housing system was broken and I thought we needed a change.
“I’m not going to jump off a bridge or immediately sell up as a result of [the tax changes]. I’m more disappointed about what it’ll do for encouraging other people to start their own ­businesses.”
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The National Farmers’ Union ­described the move as a “hammer blow to farming families”. According to Family Business UK, a lobby group, 4.8 million or 90 per cent of all private companies in the UK are “family businesses”. It claimed that the changes would lead to 391,000 job losses.
Hill said: “I think they’re going to have to review their policies at some point around the passing down of family businesses. A bit of tax I can ­understand, but it needs to be fair and reasonable.”The Treasury was asked for a ­response.