I have one final change to announce which will be of substantial benefit, particularly to small family businesses. I propose to take most family businesses out of inheritance tax altogether. This will cost £10 million in 1992–93, and £25 million in 1993–94. Relief from inheritance tax for interests in unincorporated businesses, for shareholdings greater than 25 per cent. in unquoted companies, and for working farmers will be increased from 50 per cent. to 100 per cent.
Shares dealt on the unlisted securities market, which are generally less liquid than shares with a full stock market quotation, will from today be treated like unquoted shares. That means that shareholdings of over 25 per cent. will also generally be free from inheritance tax.
For shareholdings of 25 per cent. or less in unquoted companies, and for agricultural landlords, the rate of relief will rise from 30 per cent. to 50 per cent. relief will also extend to smaller shareholdings in USM companies and to controlling shareholdings in quoted companies.
Inheritance and capital are no longer a privilege of the wealthy few. Ordinary families want to be able to pass on the wealth that they have built up over their lives to their children without an excessive proportion being taken by tax. Over the years to come I shall continue to look for ways of lightening the burden of inheritance tax. This year I propose to raise the threshold for inheritance tax by more than inflation, to £150,000. This will cost about £10 million in 1992–93. I intend to raise the threshold for capital gains tax in line with inflation, to £5,800.
Taken together, the measures that I am proposing on business rates, on VAT and on inheritance tax will be of very substantial benefit to British business as a whole and to small business in particular in the year ahead.