More than one in five family-owned manufacturers are considering a sale to overseas buyers in response to changes to inheritance tax, according to a report from Make UK, the manufacturers’ organisation, and the accountancy firm Bishop Fleming.
The report, based on responses from companies surveyed in May and June 2026, found that 22 per cent of family-owned manufacturers were weighing a sale to a foreign buyer because of the tax changes, with a further 18 per cent considering a sale to a UK buyer.
Among family-owned businesses, 78 per cent said they were worried about the effect of recent inheritance tax (IHT) reforms on succession planning. The 2024 budget changed the IHT regime to bring more assets within the scope of the tax, including a cap on business property relief.
Of the companies surveyed, 65 per cent identified as family-owned, and 89 per cent of those were also managed by a family member. From this the report extrapolated that family-owned businesses contribute an estimated £94bn to the UK economy and support about a million jobs.
The report said the tax changes raised the concern that “ownership and investment decisions become driven primarily by tax considerations rather than commercial objectives”.
It added: “This could lead some manufacturers to sell their businesses to third parties, alter ownership structures, or divert capital away from productive investment in order to manage future IHT liabilities.
“While the full long-term impact is difficult to quantify, such decisions risk weakening productivity growth and increasing the transfer of strategically important manufacturing assets to owners whose long-term priorities may not align with the UK’s economic interests.”
Across all manufacturers surveyed, high energy costs were the most commonly cited barrier to growth, mentioned by 59 per cent of respondents. The report said 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, while 47 per cent pointed to taxation. Make UK has previously warned that rising employment and energy costs were putting manufacturing investment at risk.
Fhaheen Khan, senior economist at Make UK, said: “Reducing energy costs, reviewing inheritance tax changes, strengthening apprenticeship funding and turning the Industrial Strategy into practical support on the ground are now essential if Britain is serious about securing the future of its manufacturing base.
“Family-owned manufacturers are not a niche part of the economy. They anchor skilled jobs, long-term investment and the industrial know-how Britain needs to make reindustrialisation a reality, something the prime minister is right to put back at the centre of the economic debate.”
Neil Davy, chief executive of Family Business UK, said the research added to “a growing body of evidence showing that changes to business property relief are having real-world consequences for family-owned businesses and the wider economy”.
Business groups have argued since the reforms were announced that the cut in business property relief to 50 per cent could force some families to sell their companies.
“Family Business UK has consistently warned that these reforms risk undermining the very businesses that drive long-term investment, create skilled jobs and sustain local economies,” Davy said.
“It is particularly concerning to see so many family-owned manufacturers reporting that succession plans are being disrupted and that investment decisions are being delayed as a result.”
Analysis published by CBI Economics has separately argued that the reforms could cost the exchequer more than they raise. The government has said the changes will affect about 2,000 estates a year, and in December 2025 it raised the combined relief threshold to £2.5m ahead of the reforms taking effect on 6 April 2026.
A government spokesperson said: “The chancellor is prioritising giving businesses breathing space to invest, grow and manage cost pressures.
“On Monday the chancellor will be setting out his vision for growth and how he will work with business to unlock their latent potential.
“We have cut business rates, saving thousands of businesses over £1,000 a year, capped corporation tax, are providing a £4 billion access to finance boost for SMEs and taking action to tackle late payments to help businesses invest and hire across the UK.”
