Death raid threat to family-run factories
Family-owned manufacturing businesses are increasingly looking to sell rather than face substantial inheritance tax bills under new rules that came into force in April, according to research by industry body Make UK.
A survey of 127 family-run manufacturers found that four-fifths are concerned about changes to Business Relief, which now charges a 20% inheritance tax levy on inherited business assets valued above £2.5 million. Previously, families transferring businesses to the next generation enjoyed complete relief from inheritance tax regardless of value.
The policy shift has prompted 40% of owners to consider selling their companies. More than one in five family-owned manufacturers said they may sell to an overseas buyer, while 18% are exploring UK-based sales.
Policy evolution and fiscal background
The inheritance tax changes were first announced at £1 million in the October 2024 Budget, but the threshold was subsequently raised to £2.5 million on 23 December 2025 following significant opposition from business owners and farming groups. For married couples and civil partners, unused allowances can be transferred between spouses, effectively providing up to £5 million of combined relief before the reduced rate applies.
Government data shows that in 2021-22, Business Property Relief cost the Treasury approximately £1.1 billion, with the majority going toward claims for assets worth over £1 million. In 2022-23, some 3,840 estates claimed the relief.
Foreign takeover surge
The trend toward selling comes amid unprecedented foreign acquisition activity in the UK. Foreign takeovers of UK companies reached over $197 billion by mid-2026, the highest year-to-date total since records began in 1980, with US bidders accounting for more than half of these deals. Foreign acquirers now represent 86% of all UK mergers and acquisitions by value in 2026, the highest share on record.
Make UK warned that this shift 'raises questions about who owns the UK's manufacturing base as ministers seek to rebuild vital domestic industrial capability'.
The concern extends beyond manufacturing. A survey by Family Business UK found that 57% of family businesses across all sectors will still be affected by the inheritance tax changes even after the threshold was raised to £2.5 million. That proportion increases to 64% for businesses with 100 to 249 employees.
Wider business pressures
Family manufacturers cited additional challenges beyond tax policy. Business owners called for action on energy costs, with UK industrial electricity prices nearly two-thirds above the median of International Energy Agency countries and the highest in the G7. Power costs for UK industrial businesses are approximately 50% more expensive than in Germany and France, and four times as expensive as in the United States.
Manufacturers also requested support for apprenticeship programmes to address skills shortages.
Fhaheen Khan at Make UK said: 'If policy pushes owners to sell overseas, restructure or delay investment, the UK risks losing valuable domestic capability at the very moment it is trying to rebuild it.'
The Treasury was approached for comment but had not responded at the time of publication.