An Aberdeenshire family firm could be hit with a £5m tax bill when inheritance tax changes come into force next April, sparking fresh warnings over the impact on rural communities.
The figures were revealed to Gordon and Buchan MP Harriet Cross during a meeting with the rural business in her constituency. She said the government's plan to cap business property relief (BPR) would have “catastrophic” consequences for all family-run firms.
The same business said that, in addition to the looming inheritance tax liability, it was now paying £300,000 more each year in National Insurance contributions.
At last year’s autumn budget, the government confirmed it would restrict the scope of agricultural property relief (APR) and business property relief (BPR) from April 2026.
From then, assets eligible for 100% relief will be fully covered only up to £1 million, with 50% relief applying thereafter.
Labour has said the reforms are designed to make the tax system fairer, but critics argue they risk undermining family businesses and rural economies.
Ms Cross warned: “It’s heartbreaking to hear the devastating impact that Labour’s inheritance tax changes will bring to businesses across Aberdeenshire.
"A £5 million tax bill will cripple any business, no matter the size, in addition to the burden of now having to pay hundreds of thousands in National Insurance contributions.”
She called on ministers to rethink the policy in the upcoming autumn budget: “It is vital Labour wakes up to the catastrophic damage they are causing to our rural communities and businesses.”
The Scottish Conservative MP also criticised Defra secretary Emma Reynolds for avoiding the issue during an NFU-hosted fringe event at Labour’s party conference in Liverpool.
She said: "This speaks volumes for the lack of empathy shown by Labour towards our farmers and the vital job they do in protecting our food security."
Framing the issue as one of heritage and survival, Ms Cross added: “Farming is not just a job; it is a way of life that has been passed down from generation to generation.
"Labour’s deeply damaging family farm tax threatens the very existence of this and must be reversed to ensure the industry can survive through this UK Government onslaught.”
