Don’t be put off by inheritance tax, minister tells entrepreneurs

Entrepreneurs should not be “put off” building multi-generational businesses by inheritance tax on the transfer of business assets, Emma Reynolds, the chief secretary to the Treasury, has said.

Reynolds made the comments during a visit to Numatic International, the maker of the Henry vacuum cleaner, in Chard, Somerset. The company is one of 130 manufacturers opening their doors to the public today for National Manufacturing Day, an initiative organised by the trade body Make UK.

Numatic was founded in 1969 by Chris Duncan, 86, who remains chief executive and majority owner. It employs 1,100 people, has annual turnover of £260m and made pre-tax profits of £28m in 2024, according to its latest available accounts.

Since April, depending on the arrangements he has made, Duncan’s estate could be liable on his death to pay 20 per cent inheritance tax on the value of the business.

Reynolds acknowledged the issue but said the government had listened to concerns and raised the value of business assets that can be passed on free of the tax to £2.5m.

Reynolds described Numatic as a “very impressive business”. She said: “We do want wealth creators and successful businesses. We want people turning small ideas into brilliant businesses.”

Addressing people building businesses, she added: “Please don’t be put off [by inheritance tax]. Britain has some very big strengths. The economic fundamentals are good. We’ve got the highest growth in the G7. And we’re cutting the deficit more quickly than any other G7 country.”

The rules that came into force in April give 100 per cent relief on the first £2.5m of business or agricultural property. Value above that threshold is taxed at an effective rate of 20 per cent. According to the government’s policy paper on the reforms, the allowance was increased from £1m in December 2025, any unused amount can pass to a surviving spouse or civil partner, and tax owed can be paid in equal annual instalments over 10 years, interest-free.

A survey by Make UK and Bishop Fleming earlier this year found that 22 per cent of family-owned manufacturers were weighing a sale to a foreign buyer in response to the reforms.

Reynolds rejected criticism that the Treasury acts as a “growth inhibitor”. In August the prime minister, Andy Burnham, gave responsibility for economic growth to his newly created No 10 North policy unit, and told The Times that the department’s focus on balancing the books “sometimes clouds that growth mission”.

Reynolds said the Treasury was “working hand in glove” with No 10 North. “I disagree that the Treasury is a growth inhibitor,” she said. “We, as a department, have two big responsibilities.”

Asked about concerns that the Treasury is considering raising capital gains tax again, potentially to match income tax rates, she said: “I can’t give any reassurance on the budget.” She said the budget was being held earlier than last year partly to reduce speculation, which she described as “very often inaccurate and unhelpful”.

She said the chancellor, John Healey, would use the budget to create “breathing space” for businesses and families.

Simon Lawson, Numatic’s managing director, said his main message to the minister was to buy British. “It is important for government, businesses and individuals to buy British at the moment. It is the one thing we can all do that is good for our economy,” he said. Reynolds said this was a “key focus” for the Treasury and that further plans would be set out.

Reynolds also acknowledged the impact of high energy prices on manufacturers, saying “We’ve got to deal with that.” On Tuesday, Ineos said it was mothballing three plants in Hull, with owner Sir Jim Ratcliffe citing Britain’s “ridiculously high gas price”. The TUC said this week that UK manufacturing jobs have fallen by 200,000 since 2010.

Numatic has installed a seven-acre solar farm that supplies 30 per cent of the site’s electricity and is investing £65m in a new manufacturing facility and warehouse, due to be fully operational in 2028. “We want to continue making products here in Chard for the next generation and this investment enables that,” Lawson said.

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