Rachel Reeves’ inheritance tax raid puts family firms on the brink in £14bn industry

Britain’s biggest family-run construction plant hire company is warning it could be one of many in the industry forced to sell or shut down due to the Government’s raid. The GAP Group, a multi-generation family business based in Glasgow, believes it will be slapped with an eye-watering bill under new plans by Labour.

The firm supplies construction machinery across the , including to major national infrastructure projects like . Managing Director Mark Anderson, whose grandfather set up the business in 1969, said the death of a shareholder could force them to sell up. “The options would be to speak to the current shareholders and propose a full sale of the business,” he said.

“Whether they accept that or not would be up to them. The challenge you have is if we are forced into a sale, buyers would know that it’s a forced sale, so they would offer you less because it’s a distressed sale.”

is planning to slash Business Property Relief (BPR) – which was introduced to protect family-run businesses – to 50%, at an effective rate of 20%, from April 2026.

Mr Anderson, 41, describes the plans as a “state penalty on family businesses” and warns the GAP Group could face an inheritance tax bill between £50-£100million, with its equipment worth half a billion pounds.

The company employs 2,100 people across more than 200 locations throughout the and its last pre-tax profits were £43.9million.

Its three shareholders – Mr Anderson’s father, uncle and aunt – are all in their 60s and 70s.

Mr Anderson, 41, believes the inheritance tax plans are “stonewalling” the plant-hire sector, which is worth an estimated £14 billion to the British economy.

He told the : “We’re simply custodians of the business and passing it on so it can grow, so it can offer additional opportunities in the future. We’ve got people in our business that have been with us 40-plus years. We’ve got people that started on our apprentice programme that are now directors of the business running different parts.

“You can make a fantastic living for your family in this industry. We’re hugely passionate about it.”

Steve Mulholland, Chief Executive of the Construction Plant-hire Association, warns a number of the businesses he works with are facing a similar fate. Of the 1,950 firms represented by the association, he believes more than 1,500 could be impacted by the changes.

He says the family-run businesses in the sector are asset-rich but often cash-poor, akin to .

Mr Mulholland said: “The money is constantly getting reinvested in the business because you need to have the assets to be out working to cover all your costs. There is a generation of business owners and we’ve had calls from a number of them immediately after the Budget… who are just stating, ‘Well, what’s the point in continuing? We’re not going to be able to pass the business on because the capital costs of paying back the tax man is going to be too much, we’re better off selling off the assets as we go along and winding the businesses down’.”

He warned this risks “shortening a supply chain that’s already stretched”.

The Shadow Chancellor said the Government’s proposed changes to BPR will be “disastrous and put many family-owned businesses at risk”.

Mel Stride said: “Before the election, said they’re the ‘natural party of business’. I’m afraid the Chancellor’s anti-business Budget proves they’re anything but. The will continue to defend family businesses and push for policies that support their growth and success.”

A Treasury spokesperson said: “Our commitment to business is resolute – we are cutting tax bills through investment incentives such as permanent full expensing, introducing a permanently lower business rate next year and have capped the rate of corporation tax for the duration of parliament.

“Our reform to Agricultural and Business Property Reliefs will mean estates will pay a reduced effective inheritance tax rate of 20%, rather than standard 40% and payments can be spread over 10 years, interest-free.”