22% of family manufacturers weigh overseas sale after IHT change

Twenty-two per cent of family-owned manufacturers are considering a sale to an overseas buyer because of changes to inheritance tax, according to a report from Make UK and the accountancy firm Bishop Fleming.

A further 18 per cent are weighing a sale to a UK buyer. The responses were collected in May and June 2026.

Seventy-eight per cent of the family-owned firms surveyed said they were worried about the effect of recent inheritance tax reforms on succession planning.

The 2024 budget brought more assets within the scope of the tax, including a cap on business property relief. Business groups have argued since it was announced that cutting the relief to 50 per cent could force some families to sell.

The government says the changes will affect about 2,000 estates a year. In December 2025 it raised the combined relief threshold to £2.5m before the reforms took effect on 6 April 2026.

Of all the manufacturers surveyed, 65 per cent identified as family-owned, and 89 per cent of those were also managed by a family member. From that base the report extrapolates that family-owned businesses contribute an estimated £94bn to the UK economy and support about a million jobs.

The report warns that ownership and investment decisions risk becoming "driven primarily by tax considerations rather than commercial objectives", leading some manufacturers to sell to third parties, restructure ownership, or move capital away from productive investment to manage future liabilities.

Tax is not the only pressure. High energy costs were the most commonly cited barrier to growth across all manufacturers surveyed, named by 59 per cent.

The report says UK industrial electricity prices are the highest in the G7 and that 90 per cent of manufacturers have seen energy prices rise since 2022. Economic uncertainty was cited by 53 per cent and taxation by 47 per cent.

Neil Davy, chief executive of Family Business UK, said the research showed changes to business property relief were "having real-world consequences" and that succession plans were being disrupted and investment decisions delayed.

CBI Economics has separately argued that the reforms could cost the exchequer more than they raise.

A government spokesperson said the chancellor was "prioritising giving businesses breathing space to invest, grow and manage cost pressures", pointing to cuts to business rates worth over £1,000 a year for thousands of firms, a capped rate of corporation tax and a £4bn access to finance package for SMEs.

For an owner-managed business of any size, the practical point is the arithmetic of handing it on. With relief capped and the combined threshold set at £2.5m, the tax bill on succession is now a number a founder can calculate rather than assume away.

That calculation is being made before the business is ready to be sold, which is how a trade buyer ends up owning a firm the family intended to keep. Founders in that position have a defined date to work from — 6 April 2026 — and a valuation question they can put to an accountant this quarter.