Coach operators warn of Inheritance Tax threat

Coach operators across Britain have warned that the long-term viability of their business is under threat from changes to Inheritance Tax announced by the Chancellor, Rachel Reeves.

A survey by the CPT suggests 71% of coach operators will be affected by the change to inheritance tax rules.

About 85% of small and medium sized coach operators in Britain are family owned. Under changes announced in the Budget, family businesses with assets of more than £1 million will, for the first time, be subject to inheritance tax. Most coach operators own garages with substantial land for parking, in addition to vehicles themselves – which can cost more than £300,000. Given the capital-intensive nature of the industry, most operators have assets above the threshold.

The CPT survey also found 46% believe the new Inheritance Tax rules threaten the viability of their companies. Several said they had put plans for expansion, including acquisition of new vehicles and property, on hold.

“It is disappointing that this change has been announced with so little warning or consultation, prompting members to scramble to reconsider investment plans” – Alison Edwards, Director of Policy and External Relations at the Confederation of Passenger Transport

Alison Edwards, Director of Policy and External Relations at the Confederation of Passenger Transport, said: “Coaches are part of the fabric of daily life in communities across Britain – taking children to school, sports teams to matches, offering day trips and taking people on holiday.

“Many of these operators are long established local businesses which have been painstakingly built up over several generations. They are run by entrepreneurial families with much of their net worth tied up in garages, land and vehicles.

“The industry only recently recovered from a near death experience during the Covid-19 pandemic and is now looking at spending hundreds of millions of pounds on low-emission coaches. So it is perplexing that the government is discouraging investment with the prospect of hefty and unaffordable inheritance tax bills, in addition to a rise in national insurance contributions.

“It is disappointing that this change has been announced with so little warning or consultation, prompting members to scramble to reconsider investment plans. We will be urging the Treasury to reconsider.”