Family firms urge chancellor to reverse tax hikes

Chancellor Rachel Reeves has vowed to go "further and faster" to kickstart a stalling economy.

But ahead of her Spring Statement on Wednesday, two well-known family firms have urged her to reverse parts of her October Budget - a rise in employer National Insurance (NI) contributions and changes to inheritance tax relief.

Herefordshire's Wye Valley Brewery said it would face an "enormous" inheritance tax bill in the coming years, potentially delaying or cancelling its growth plans.

Worcestershire steel fabricators Underwoods said the NI increase meant it had cut back on investment plans. Reeves said the tax rises were necessary to "rebuild" public services.

"We really need the chancellor to reconsider and then look at how she's taxing businesses that are trying to contribute to the wider economy," said Will Underwood, a director at 135 year-old Underwoods Steel Stockholders and Fabricators in Worcester.

Mr Underwood, 29, said the NI increase would add 10% to the firm's costs overnight, with the funding pulled from planned investment projects such as new equipment and staff training.

NI contributions for employers will increase from 13.8% to 15% on a worker's earnings above £175 from April.

That is a jump Wye Valley' Brewery's managing director Vernon Amor said would push up the price of its beer.

"This is going to be probably the single biggest increase in costs that's going to come through this year," he said.

After seeing its busiest ever year of trading in 2024, this year Wye Valley Brewery celebrates its 40th anniversary.

But director Vernon Amor said the chancellor's changes to inheritance tax had created a major headache for him and his father and firm's co-owner Peter Amor, 78.

"When the inevitable happens, we will be faced with an enormous inheritance tax bill," said Vernon Amor.

He said the total cost is likely to be more than £1m.

Prior to October's Budget, farmers and family-owned firms were able to pass on assets from one generation to the next tax free.

But from April 2026, only the first £1m of an owner's business property will be exempt. After that, it will be taxed at 20% - half the usual rate of inheritance tax.

Mr Amor said a major expansion of the brewery – planned for the next three to five years – could now be delayed or partly-cancelled.

"Adopting this policy won't bring in that much money to the government, but it will affect businesses like ours," he said.

The Treasury has argued its changes will make the inheritance tax system fairer.

While estimates vary, the Office for Budget Responsibility said the projected revenue from the changes to inheritance tax relief would bring in £0.5bn a year from 2027/28.

Rachel Reeves' first Budget contained historically big tax rises, a move that allowed her to increase day-to-day public spending over the next two years.

To help bring down lengthy waiting lists, the NHS budget is due to rise by an extra £22.6bn a year by 2027.

Part of that money will be spent on treating patients in private hospitals.

"It's what they have to do to make sure they get appointment lists down to a level they can handle," said Robert Lawrence, 80.

An NHS patient, he waited 14 weeks before being offered hip replacement surgery at a private hospital in Worcestershire earlier this month.

The average NHS waiting time for orthopaedic treatment in the county is currently 23 weeks.

"It's changed my life altogether," he said. "In way of being able to do everything around the house and look after my wife who sadly can't walk very far."

Last month, the government said it had already met its election pledge to deliver two million extra appointments in its first year.

But there is still a long way to go.

More than 85,000 patients in Herefordshire and Worcestershire were on waiting lists for treatment at the start of 2025.

Just under 2,000 had been waiting more than a year.

After 43 weeks waiting for a hysterectomy, Herefordshire artist Rebecca Farkas finally had her pre-op appointment last week.

Ms Farkas has suffered chronic pain from endometriosis since she was a teenager.

But last year her condition worsened and she was admitted to A&E after fibroids in her uterus caused heavy bleeding.

"It really affects my mental health on the waiting list because there's not much communication," she said.

"I'm also self-employed, so if I don't work, I don't get paid."

A key Labour election pledge for the end of this Parliament is for 92% of patients to begin treatment or be given the all clear within 18 weeks.

This has been an official NHS target for some time but has not been met since 2015.

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