Sir James Dyson has said that Rachel Reeves' 'really, really damaging' inheritance tax changes have put his family business at risk.
The billionaire founder of Dyson said today that he fears being unable to pass his business onto his children because of the Labour Chancellor's changes to Business Property Relief (BPR).
From April 2026, companies will not be able to pass assets down through generations without paying inheritance tax.
On BBC Radio 4's Today programme this morning, Sir Dyson said his company would have to find 'billions of cash' to pay the death duty on Dyson, which would be impossible as his company would have to 'sell the business to pay it'.
He said private family-owned companies will struggle under the tax changes next year, explaining: 'You have to pay a 20 per cent inheritance tax.
'Actually it's 40 per cent because you have to take a dividend, if you could, to pay the 20 per cent.
'What it means is you'd have to sell the business. And who wants to start a family business if you can't leave it to your children, if it can't carry on in the same ethos to which it started.'
The changes to the 'death duty' or inheritance tax means that full relief will only apply to the first £2.5million of a business' assets when the company owner dies, with any amount above that threshold subject to a 20 per cent tax.
Sir James Dyson (pictured) said on BBC Radio 4's Today programme this morning that Rachel Reeves' changes to inheritance tax were 'really, really damaging' to privately-owned family businesses
Sir James Dyson's son, Jake Dyson (pictured) is already involved in the business. But his father fears that Rachel Reeves' tax changes will make it impossible to hand the business down when he dies
The tax threshold was initially even lower before it was changed by the prime minister earlier this week, from £1.5 to £2.5million.
The Dyson vacuum mogul said simply: 'You cannot pay that tax.
'We haven't got billions of cash. You know, we don't have it, so you have to sell the business to pay it. But a company has no value.
'There's no assets that you can sell. Its value is a multiple of its profits, so it's paper money. You simply don't have that money.'
But the engineering tycoon said that the changes to BPR were different from altering Agricultural Property Relief (APR) - the so-called 'family farm tax' which caused widespread protests this year - because a farm's value is in its land.
Sir Keir Starmer had watered down the inheritance tax raid on farmers after a sustained backlash from rural voters this summer, and the new threshold also applies to inheritance tax on family businesses.
The Dyson founder said he had already introduced Jake Dyson, his son, into the family business.
'In my last gasp, I would like to see it going from strength to strength - for my son to take it over and for it to remain a family business,' he said.
Manufacturing businesses would stay in the UK if the Government and the country 'wanted it', billionaire Sir James Dyson also said.
The businessman and inventor said that children's 'enthusiasm for making things' seemed to 'get stamped out of them'.
The vacuum mogul moved his operations to east Asia in 2002, and has been a long-standing critic of the Government's industrial policies
He said: 'They see a problem and they go about solving it imaginatively.
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'If only society was like that, we had lots of engineers who could develop new technologies, make things work better and create wealth and jobs.'
Sir James, who moved his company's production operations to east Asia in 2002, has been a long-standing critic of the Government's industrial policies.
He has previously called on both Conservative and Labour governments to do more to protect UK manufacturing.
On Friday, he said he had moved production to east Asia to be nearer suppliers, denying that he had been motivated by lower labour costs.
He said: 'When we moved our production to Asia, which I didn't want to but I was forced to, everyone else was moving their production to Asia.'
Sir James added: 'You can't have a factory where you have no suppliers, you've got to be close to your suppliers for quality, for improving the technology, and for quick supply.'
Asked what the UK could do to keep manufacturing in the country in future, he said: 'What would keep manufacturing here is if the Government wanted it, and the country wanted it.'
He added: 'We talk an awful lot. I mean, politicians obviously talk an awful lot, but I don't think we get things done. I don't think we're keen on making things.
'We've lost our interest in engineering and lost our interest in manufacturing, and it's a great shame, because it is a wealth creator and it creates jobs.'
While Dyson's production is in Asia, and the company moved its headquarters to Singapore in 2019, it maintains a research and development operation in Britain, employing around three times the number of people it did in its UK factories.
Sir James dismissed the suggestion that manufacturing was something 'developing countries' did, while the future of the British economy was in services.
He said: 'China makes things, and you would hardly call it a developing country, it's probably the most powerful and richest country in the world.
'So it's really, really important to make things, and I think in the end, services will die if you don't make things.'
While China has the second largest economy in the world, its large population means that its GDP per capita - a key indicator of living standards - is around a quarter that of the UK.