UKHospitality has welcomed the government’s decision to increase the threshold for Business Property Relief (BPR) from £1m to £2.5m, a change due to take effect in April 2026.
The trade body said the move would help protect family-run hospitality businesses, particularly those operating in rural and coastal communities, after warning that earlier inheritance tax changes put many firms at risk.
It comes as UKH had consistently advised reforms to BPR, following research that revealed 47% of hospitality businesses were affected by the changes.
Members of the organisation have highlighted what they described as severe real-world consequences. Oak Taverns said it had paused growth plans and was instead considering which pub it would need to sell to meet a future tax bill.
The Empire Hotel in Llandudno likewise warned it would ultimately close rather than pay the inheritance tax charge, while Milsom Hotels and Restaurants said the original proposals would lead to job losses.
While the higher threshold was a positive step, UKH still expressed concern that many businesses would still face substantial inheritance tax liabilities. In light of this, the trade body has called on the government to continue working with the sector on further solutions.
Kate Nicholls, chair of UKH, said: “Family-run businesses are part of what makes much of hospitality so special, with generation after generation taking on the family pub, restaurant or hotel to continue its legacy.
“We have worked extensively with the treasury and MPs across parliament to highlight the unintended consequences of this policy and the impact it could have on local communities, particularly in rural and coastal areas.”
She added: “I’m pleased these concerns have been heard loud and clear, and that the government has acted. This does go some way to safeguarding family-run hospitality businesses. It’s critical this engagement with the sector continues, as there is still more that can be done.”
