Sir James Dyson has voiced strong criticism of Labour Chancellor Rachel Reeves’ proposed changes to inheritance tax, warning they could jeopardise the future of family-owned businesses in the UK. The billionaire inventor expressed fears that the new rules, set to take effect from April 2026, would make it impossible to pass his company onto his children without incurring substantial tax liabilities.
Key takeaways
- Sir James Dyson argues that Labour’s inheritance tax changes will force family businesses to sell up to cover death duties.
- The proposed changes limit Business Property Relief (BPR) to the first £2.5 million of assets, with a 20% tax on amounts above this threshold.
- Dyson claims his company would need to find ‘billions of cash’ to pay the tax, which is not feasible without selling the business.
- He suggests the UK has lost its enthusiasm for manufacturing and engineering, impacting its ability to create wealth and jobs.
Inheritance tax changes pose existential threat
Sir James Dyson stated on BBC Radio 4’s Today programme that the planned inheritance tax reforms are "really, really damaging" to privately-owned family enterprises. He explained that under the new rules, companies will face a 20% inheritance tax on assets exceeding £2.5 million. However, he argued that due to the nature of business valuations, which are often based on profits rather than liquid assets, companies would likely need to sell themselves to meet this tax obligation. "You have to pay a 20 per cent inheritance tax. Actually it’s 40 per cent because you have to take a dividend, if you could, to pay the 20 per cent," he elaborated, highlighting the impracticality of such a requirement for businesses that do not hold vast amounts of cash.
Concerns for future generations and manufacturing
Dyson expressed concern that such tax policies would deter entrepreneurship, questioning who would start a family business if they could not pass it on to their children. He revealed his desire for his son, Jake Dyson, to take over the family business and ensure its continued success. The inventor also broadened his critique to encompass the UK’s broader industrial policy, suggesting a national lack of enthusiasm for manufacturing and engineering. He noted that while Dyson moved production to East Asia in 2002 to be closer to suppliers, he believes the UK government and society need to actively ‘want’ to retain manufacturing. "We’ve lost our interest in engineering and lost our interest in manufacturing, and it’s a great shame, because it is a wealth creator and it creates jobs," he concluded, stressing the importance of making things rather than relying solely on services.
