Inheritance Tax (IHT) is often described as unpopular. I’d go further: it is the most economically damaging, counterproductive, and morally indefensible levy in the UK tax system.
It is, at its heart, a tax on success. It punishes those who have built businesses, created jobs, and generated wealth legally and transparently, simply because they die. For entrepreneurs, the very people who take risks, invest their own capital, and create value for the wider economy, it is a final insult from the taxman, one that strikes at the businesses and families they have worked tirelessly to support.
Everything caught by IHT has already been taxed once, often several times. Entrepreneurs build companies, pay corporation tax, pay business rates, then pay income tax, National Insurance, VAT, capital gains tax, the list goes on. When they die, the state takes another bite, often forcing the break-up or sale of the very businesses that provide livelihoods in their communities.
This double-dipping principle is not just unfair; it is corrosive to trust between business and government. For the £7–8 billion IHT raises (less than 1% of total tax receipts), the damage it does to investment, confidence and stability far outweighs the revenue.
The biggest victims of IHT are not hedge fund managers or multinational CEOs but small and medium-sized family businesses. A family-run farm or engineering firm may be asset-rich but cash-poor. When a founder dies, their heirs are often left with no option but to sell assets, break up the business, or take on crippling debt to pay the tax bill.
The removal of IHT discounts for family farms has already shown how devastating this can be. The same applies to countless SMEs across sectors from construction to manufacturing. For communities, it means the loss of local employers and the erosion of intergenerational enterprises that anchor regional economies.
For high-growth entrepreneurs, IHT is yet another reason to move wealth offshore. The prospect of a 40% tax on their estate encourages the wealthy either to seek aggressive avoidance schemes or to relocate to jurisdictions that actively welcome entrepreneurs. This is not theory. It is happening. Britain loses talent, capital and jobs because IHT signals to founders: “Build your business here, but don’t expect to pass it on.”
Business owners are not seeking loopholes or sweetheart deals. What they want is consistency and recognition that their lifetime of wealth creation should not be dismantled on death. Inheritance is not some unearned windfall; in many cases it represents decades of sacrifice, late nights, and risk-taking. To strip that away is to devalue the entrepreneurial journey itself.
There are smarter, fairer ways to tax wealth and support growth. Abolishing or radically reforming IHT would not only restore faith in the tax system but also unlock more investment, succession planning, and long-term business growth.
At a minimum, entrepreneurs need clarity and stability, not the constant speculation of further tightening, which freezes investment decisions and undermines confidence.
From a political perspective, IHT is a no-brainer. It is hated across the spectrum, and its revenues are marginal. Yet its continued existence is a drag on the UK economy and a deterrent to entrepreneurial ambition. If Britain is serious about growth, innovation and creating jobs, we need to stop penalising those who take risks and build value.
As entrepreneurs, our legacy should be businesses that endure, families that thrive, and communities that benefit, not assets stripped by the state at the very moment we are no longer here to defend them.
Inheritance Tax does nothing to reward work, enterprise or investment. Instead, it undermines them all. It is time for government to be brave enough to scrap it and finally stop punishing Britain’s entrepreneurs for their success.
