Chris Franklin MD at Ranheat Engineering Ltd – a leading UK manufacturer of wood combustion equipment – continues his series of articles exclusively for Furniture and Joinery Production. This month he writes about the implications that the new Government is having on the woodworking industry.
A large number of people in the UK woodworking industry are SMEs employing often less than 50 people often many less. So, the obvious change is in Employers National Insurance.
The other area is inheritance tax on small businesses when passing on premises and equipment to the next generation.
The farming community have been very vocal about this change to inheritance tax, but it effects all types of businesses, not just farming.
The long-standing ability to pass on family businesses without worrying about Inheritance Tax is due to come to an end in April 2026. Business Property Relief has allowed individuals to transfer trading businesses to the next generation free of inheritance tax, allowing family-owned businesses to carry on from generation to generation.
On a personal note, my son is now in Ranheat and dealing with the children of the parents that I dealt with 30+ years ago. Our aim is to continue to be a family run business and ensure stability to our many customers.
The government’s recent budget introduced new rules that will change all that. From 2026, Business property relief will be capped at £1 million for qualifying assets, after which the relief will be halved, reducing inheritance tax liability by 50%. So, what does this mean? this means if a business or a share of a business is valued over £1 million, the Inheritance Tax on the excess will be charged at 20%.
For many people in the UK woodworking industry, this is a big change. It’s understandable why the government wants to limit these tax-saving vehicles, but unfortunately, small and medium sized businesses seem to be getting effected, and these new rules could cause serious financial problems for family-owned businesses in the UK woodworking industry.
“In recent months we have seen several of our long-term customers just throw in the towel and stop trading.
In several cases they were sitting on valuable sites and the sale of the site was enough to retire on” The stopping of these small businesses, all of which were successful, has led to a loss of jobs in the woodworking industry and I am sure that this was never foreseen when the decisions were made by Government to change the rules on inheritance tax.
The government had hoped to catch the few large owners who used land to avoid inheritance tax, but it is the small business owners who seem to be being penalised the most.
For further information on all types and sizes of Industrial Woodburning equipment from 75 kW upwards contact Ranheat on 01604 750005 [email protected] www.ranheat.com Ranheat also make spares and service and repair other makes of woodburning boilers and heaters.
