Confidence slips as businesses brace for “significant” tax rises  

Confidence slips as businesses brace for “significant” tax rises

Family-owned businesses fear changes could threaten their business

  • More than half (52%) of family businesses rate government’s policies unfavourable
  • Majority (80%) of family businesses say Labour wasn’t honest about tax plans

London: Eighty five per cent of business leaders say they expect the Government to increase business taxes in the Budget with 35% fearing significant tax rises according to research carried out by Censuswide.

Rises in Corporation Tax were identified most often by businesses, despite a pledge in Labour’s manifesto not to increase it.

Others include Business Rates, Capital Gains Tax and Employer’s National Insurance. More than a quarter (26%) of businesses say they feel less confident about the outlook for their business since Labour won the election.

The poll by Censuswide and commissioned by Family Business UK includes several different types of business ownership models, including PLCs, family businesses and private equity-backed firms. It reveals a marked difference in sentiment among Britain’s family business owners compared to other business models

52% of family-owned businesses polled rate the Government’s business policies as unfavourable and four out of five don’t believe the Labour Party was honest with voters about their plans for tax rises in the lead-up to the election.

There has been speculation about whether Labour could scrap Business Property Relief (BPR) in the Budget – a vital policy that underpins family businesses.

67% of family firms say the policy is either important or essential to their business and removing it from the budget could result in them selling assets (31%), being sold completely (20%) or liquidated (20%) to cover additional costs.

Neil Davy, Chief Executive Officer of Family Business UK said:
“The Chancellor used her speech a Labour Conference to repeat a pledge to not increase the rates of Income Tax, National Insurance or VAT. But a running commentary about the budget deficit and the need to increase other taxes, is extremely damaging for business.

“The Chancellor wants growth and Investment. Our members want that too. We hear that businesses are more confident because the Government has brought back stability. But that’s not what our research indicates – particularly for family businesses who are fearful the Government may be about to pull the rug from under them, removing tax policies that underpin their very model of ownership.”

The Need to Retain Business Property Relief

Ongoing uncertainty around whether the new Government will scrap or amend BPR means that family firms are extremely concerned. More than 70% say unfavourable policies will lead to lower profits and almost two thirds (63%) say they will not increase headcount in the next 12-months.

Family businesses are the beating heart of the economy, operating in every corner of the country. Britain’s 4.8 million family businesses support thriving local communities up and down the country, employing 13.9 million people and contributing more than £200 billion in taxes every year.

The model of family business ownership, which can see companies thrive for hundreds of years, is supported by a long-established policy known as Business Property Relief, or Business Relief (‘BPR’). The policy, first introduced in 1976 by the then Labour Government, has been retained by successive governments since and is widely recognised as providing a lifeline and level playing field for family firms to invest over the long term.

Each year, around 85,000 privately owned family businesses change hands when the owner dies or chooses to retire. BPR allows those businesses to continue trading, without interruption, when other family members take on the responsibility for running them. It means that neither they, nor the business is subject to additional taxes, or costs which, in most cases, are borne by the business. Non-family-owned businesses incur no tax penalty when ownership changes.

Neil Davy continues: “Our survey clearly shows the growing pressure family business are under due to uncertainty around potential tax rises and ongoing rumours about scrapping of Business Property Relief at the next election.

“While the Government allows this uncertainty to continue, Britain’s family business feel in limbo and important investment decisions are being put on hold.

“I would urge the Chancellor to ignore the voices of vocal minority who believe that BPR is a loophole for the wealthy, and would see it scrapped, and instead listen to us and our members about how it underpins an entire sector of the economy.

“Business Property Relief is not just a tax policy, it’s a commitment to fairness, opportunity, and the future of British enterprise. We would urge the Government to protect it or risk potentially catastrophic consequences of lost jobs, growth and prosperity in every constituency across the country.”

ENDS.

Notes to Editors

Censuswide conducted a poll of 500 business leaders and senior decision makers across the country between September 5 and September 9, 2024.

About Family Business UK

Family Business UK is the largest organisation dedicated to promoting, championing and advocating for family businesses. It is movement of more than 200 of the largest and best-known family businesses across the country, including a number of household names and global companies. It works to showcase the role family businesses play in creating a more prosperous and sustainable future and highlighting the impact of family-owned businesses.

FBUK is a not-for-profit organisation.

FBUK Delivers Succession Planning Masterclass

FBUK Delivers Succession planning Masterclass

Family Business UK were delighted to host another highly informative Masterclass on the critical topic of Succession in Family Business earlier this week in London.

Over 40 family business leaders braved the inclement weather and attended the Masterclass held in Canary Wharf  – kindly hosted by our carefully selected Corporate Partners KPMG (at their excellent facilities) and with expert contributions from both KPMG, and FBUK partners, Farrer & Co.

This session provided senior family business leaders with an opportunity to engage in knowledge sharing, benchmarking, and best practice, all tailored to the unique challenges of family-owned enterprises.

Succession planning is essential for any business, but in the context of a family business, it forms the foundation for sustained, multi-generational success.

Given the current uncertainties facing the sector, such as potential changes to Business Property Relief, Agricultural Property Relief and Gift Holdover Tax, our attendees benefited from immediate and expert insights to support their succession strategies. (Find out more about BPR in our Back Family Businesses Campaign Hub).

Delegates had the unique opportunity to engage directly with our esteemed panel of senior family business leaders, in our session “Why are you in business together?” including:

  • Nick Linney, Owner and NED of 5th-generation marketing and design agency, Linney
  • George Hillier, Chair of Hillier Nurseries Ltd, of 5th generation, 160-year-old South West Horticulture business.
  • Sophie Seddon, Family Non-Executive Director at 5th-generation family business, Novus Property Solutions (JSSH)

Our delegates heard a compelling fireside chat case-study, sharing the learned experiences of Keith Miller, Group Chair and Ben Cavanna, Family Non-Executive Director, of 4th generation Southwest family business Cavanna Homes, as to their transition between generations.

Our sessions, from “Roles in the Succession Process”  to “Building structures for success“, offered priceless, practical insights into what steps can be taken now to ensure the continued success of family-owned businesses for future generations, on topics such as:

  • Working together as a family and business.
  • Aligning your purpose with your succession plan.
  • Knowing your role and how to be the best at transition.
  • Understanding the rules and regulations

In between sessions, delegates had the opportunity to actively benchmark, by sharing experiences and views in break-out discussions and facilitated workshops, working in small groups. Networking breaks and refreshments were enjoyed throughout.

The day concluded with the opportunity for peers to connect, allowing attendees to reflect on the session’s key takeaways and discuss the next steps for their own organisations and engage in more networking with refreshments in a relaxed environment.

We would like to extend our gratitude to our speakers and corporate partner experts, including Bryony Cove & Anthony Turner from Farrer & Co.

And a special thanks to our carefully selected corporate partners, and hosts, at KPMG, Steve Hickman, Mark Essex, and Craig Rowlands.

Masterclass Programme & Member Resources

Find out more about the Family Business Masterclass Programme  covering topics of material import to Family Businesses, including Ownership, Succession, Governance and Non-Executive Directors (neds).

Further Resources & Reading 

Public Resources

As part of FBUK’s support for the Family Business Sector, non-members can find a series of Succession Guides, supporting both the Senior Generation to manage transition, and the Next Generation, to find their way in the family business; in our Public Resources centre, as complimentary downloads.

Exclusive Member resources

FBUK members can  log into the FBUK Member Resources Centre to access an exclusive host of resources to help your family business, with Succession, Governance and understanding the unique life stages of the family business journey, with resources available in forms from Podcasts to Videos, and Expert Guides to short Briefing notes.

END.

FBUK Autumn Budget Submission – Retain BPR

FBUK Autumn Budget Submission – Retain BPR 

Family Business UK (FBUK) has called on the Labour Government to commit to retain Business Property Relief in full and bring Gift Holdover Relief eligibility into alignment with BPR.

In a submission to Government, ahead of the Budget on 30th October, FBUK has repeated calls from our Manifesto and previous Budget submissions to ensure family businesses are not disadvantaged or penalised.

The submission states:

With strained public finances, the removal of BPR may appear an attractive option. Such a move would represent an existential threat to family businesses.

Ahead of the Budget, Family Business UK calls on the Government to:

  1. Commit to retain Business Property Relief in full
  2. Bring Gift Holdover Relief (GHR) eligibility into alignment with BPR to enable a smooth transition in ownership between generations

These reliefs are not just financial measures. They are policies that sustain the values of hard work, responsibility and opportunity – values that underpin our economy and way of life.

Removing or capping them would be catastrophic to family businesses, lead to the loss of good jobs, weaken the economy and leave Britain a poorer place.

The Family Business UK Budget submission is now available to view online. To download the full FBUK budget submission, please click here.

END.

 

FBUK warns of Threat to Family Businesses

FBUK warns of Threat to Family Businesses

Family Business UK (FBUK)  has warned how a vocal minority of commentators risk undermining Britain’s family businesses in the run up the Budget on 30 October.

In a letter to the editor of The Daily Telegraph, FBUK CEO Neil Davy, urges the Government to speak directly to family business owners to understand the importance of supportive policies and how businesses can deliver the Government’s growth agenda.

Below is the full text of the letter.

Ill-informed commentary puts jobs and growth at risk.

Sir, the Government was always going to face difficult choices on tax. But, it must be wary of making policy decisions that penalise businesses based on seemingly unfounded opinion (“Reeves told to charge capital gains tax after death.” 9 September).

Britain’s 4.8 million family-owned businesses are a case in point. Supported by policies that allow them to thrive across generations, they employ half the UKs private sector workforce and contribute more than a quarter of government tax receipts.

Family businesses are well placed to support the Government’s growth agenda. But a vocal minority would have the Government pull the rug from under them, risking a significant loss of jobs in every constituency across the country, lower tax receipts and threatens the future of otherwise successful businesses.

Contrary to the views of a minority of commentators, Business Relief, or Business Property Relief (BPR) is not a loophole that protects the wealthy. Nor is it a policy that benefits the privileged few. It is a policy that underpins the very model of family business ownership, and successful multi-generational businesses.

It has been retained by successive governments for 50 years for the simple reason they understood it gives family business owners the confidence to make long-term investments in their business and the communities they serve.

Many of Britain’s biggest and best-known brands are highly successful multi-generation family businesses. Those who run them have every right to be angry and alarmed by the IFS’ suggestion that future generations are not quite up to the task, or that the ultimate goal of all private businesses – including family businesses – is to sell and cash-in.

On behalf of all family businesses, I urge the Chancellor and her advisers to ignore these voices and speak directly to the owners of the family businesses whose future risks being threatened by ill-informed voices, about how they can – and want to – support delivery of the growth, jobs, and opportunity your government has promised.

Neil Davy
CEO, Family Business UK.

 

Labour’s ambitions for economic growth – rhetoric or reality?

Labour’s ambitions for economic growth – rhetoric or reality?

The UK’s family businesses range from some Britain’s largest, well-known household brands to the SMEs and local plumbers, electricians, builders, restaurant owners, shopkeepers and mechanics that keep Britain moving.

The 4.8 million family businesses in the UK are the backbone of our economy. They employ 13.9 million people and contribute over £200 billion through tax receipts every year.

These businesses have been around for generations; in many cases one or two generations, but in other cases a dozen generations or more. One of the reasons for the success and longevity of these firms is a long-standing piece of policy that successive governments have committed to retain for decades; Business Property Relief (BPR).

As a policy, BPR is not well known. You don’t hear about it for a simple reason – it works!

It allows the owners of the business to pass it on to the next generation without additional taxes, in the same way that other models of business ownership such as PLCs and private equity-backed businesses are also not subject to. It therefore ensures family businesses can compete on a level playing field.

BPR is also misunderstood. It’s often mistakenly seen as a tax loophole for wealthy individuals. In reality, if BPR were abolished, the additional tax would not be carried by individual owners. It would be a tax on the business.

To pay this tax bill, the business owners would likely need to hold back capital that would otherwise be used to recruit, train, and upskill staff, or money that would be invested in new products and services, or used to expand into new markets. In other cases, business owners would be forced to sell off parts of the business to raise the capital. Many would be forced to sell, or even close the business entirely, at the expense of jobs and livelihoods.

Every year, around 85,000 family businesses are passed to the next generation when the head of the family retires or passes away. If the owners of these businesses are not able to pass ownership on without an additional tax burden (which other businesses are not subject to), not only would the future of those firms and jobs be at risk, but their sale or closure would undermine economic growth in the UK and reduce the tax receipts into the Treasury.

Changing or removing BPR runs counter to fairness and common sense. That’s why successive governments for more than 50 years have supported and protected this legislation that is a lifeline to family businesses, who represent 90% of all private firms in the UK.

Family businesses are well placed to support the Government’s goal of providing stability, creating economic growth and social prosperity. But to be able to do that, the Government needs to commit to retaining Business Property Relief.

Family businesses in the UK need everyone’s backing. Lend your support at:https://www.familybusinessuk.org/what-we-do/bpr-campaign/ 

Family Business Week 2024 to Focus on “supporting local economies and communities”

Family Business Week 2024 to Focus on “supporting local economies and communities”.

Family Business Week will return this year, from 25th – 29th November, to celebrate family businesses as the cornerstone of local communities up and down the country.

In every corner of the UK, Britain’s 4.8 million family-owned firms are key employers, creating meaningful careers for millions of people, and giving back to the communities they serve.

Now in its fourth year, Family Business Week will this year shine a light on the amazing work of family businesses across the country ensuring the contribution they make to our economy and communities is recognised and celebrated.

With events taking place across the country, the entire week is an opportunity for everyone to get behind family businesses and show their support. Family Business Week builds on our advocacy work to demonstrate to government the importance of family firms and the policies needed to sustain them.

Neil Davy, CEO of Family Business UK said:

“From local tradespeople, retailers, makers and tech innovator to some of our biggest and best-known brands, family businesses thrive in every corner of the country. They create wealth through valuable jobs and long-term careers, and social value by investing in the communities they serve.

In this context, Family Business Week is our chance to tell the world just how important family businesses are in our economy. Why not join us in a week of celebration? Join one of our events, reach out to your network – including your local MP – and help us to spread the word.”

Get Involved in Family Business Week 2024

Whether you’re a family business owner, employee, adviser or a policymaker, get involved and show your support.

  1. Show your support on social media
  2. Nominate a ‘Ones to Watch’ candidate
  3. Attend a Family Business Week event
  4. Invite your MP to visit on #familybusinessfriday
  5. Send your MP our Manifesto and back family business infographic

Family Business Week 2024 is proudly sponsored by our corporate partner, NatWest.

Andy Gray, Managing Director Commercial Mid-Market at NatWest said:

“Family businesses are the backbone of our economy and the bedrock of our communities. They make up 90% of the UK’s total private sector firms and employ 14 million people. At NatWest we see real opportunity to support family businesses to grow, innovate and create jobs over generations, driving the UK economy forward for the long term. We are committed to championing the sector and through our partnership we’re excited to meet and support FBUK members.”

Ones to Watch

Our ‘Ones to Watch’ nominations showcase the best and brightest talent in family businesses across the country – individuals who live and breathe the values of family businesses as the lifeblood of local communities and local economies.

Nominations are now open: Download the nomination form

Do you know a champion of local community? An innovator redefining strategy to support the local economy? Someone spearheading the campaign to make their family business a force for good?

Open to anyone working within the business, affiliated charity, foundation, community outreach programme or similar (they do not need to be a member of FBUK or a family member to qualify).

Why Nominate?

  • Celebrate the incredible work of a person in your business and show your appreciation.
  • Raise their profile, and your company’s.
  • Inspire other family business leaders.

How To Nominate

It couldn’t be easier to nominate someone from your business.

Send us an email with the subject ‘Ones to Watch Nomination’ to info@familybusinessuk.org with the completed nomination form attached.

We will then review and shortlist the nominees, and if the person you have nominated is successful, we will get back in touch with you, so you can share the exciting news!

Our judging panel will be considering several criteria when reviewing nominations, including:

  1. Investing in the local economy and community (nomination statement): What is this person doing to invest in their local economy and act as a force for good in the local community?
  2. Enriching your local area: Are there any initiatives which have been implemented to better the surrounding areas with purpose-led sustainability practices, provision of education, social housing, public resources, or improved high streets
  3. Providing employment: Does this person pioneer for the real living wage, job security, flexible working, training and progression, equality or LTIPs
  4. Supporting local suppliers: How do they support local suppliers? Are they using an innovative or creative approach to balance supply and demand?
  5. Local charitable giving: How do they use social value to tackle inequality?

We look forward to receiving your nomination and celebrating Family Business Week 2024 with you.

Family Business Week 2024 is proudly sponsored by our corporate partner, NatWest.

 

Back Family Businesses Campaign Hits National Press

Our Back Family Businesses campaign has been featured in both The Times and The Guardian newspapers with half and full-page adverts designed to raise awareness of the importance of family-owned businesses.

Imagine Britain without family businesses

As MPs return to Westminster, and ahead of the political Party Conference season, the Back Family Businesses campaign is stepping up a gear with a programme of activity.

This is an ideal time to remind MPs of the important businesses and people they are elected to represent. It is vital they understand the importance of retaining Business Property Relief (BPR) to support family businesses, and the implications for the economy and their constituents of any decision to amend or scrap it.

Visit the Back Family Businesses campaign page for more information on how you can support the campaign and contact you local MP.

Family Businesses in the UK need your support

“Scrapping BPR could be catastrophic” FBUK tells Forbes

“Scrapping BPR could be catastrophic” FBUK tells Forbes.

Family Business UK has warned of the potential unintended consequences of scrapping Business Property Relief (‘BPR’) on family businesses.

Speaking to Forbes magazine, FBUK CEO Neil Davy said: “capping or scrapping BPR without fully understanding the consequences would be catastrophic for these [family] businesses, the sector, and the wider UK economy.”

Ahead of the Autumn Budget (30 October), the article in Forbes explores possible tax changes that have been mooted for review by the Government, including BPR.

Family Business UK has repeatedly talked about the importance of retaining BPR as part of a supportive policy environment that incentives family businesses to plan and invest for the long term.

A campaign calling on policymakers, MPs and supporters to Back Family Businesses, which was launched by FBUK this summer, asks government to retain BPR and give family-owned firms the support they need to thrive.

Commenting in Forbes, Neil Davy continues: “Business Property Relief is crucial to the long-term outlook and prosperity of family businesses, and the family business sector overall. BPR enables family businesses to be passed to the next generation without the business incurring costs which would otherwise be used to invest in training, job creation, new products and services or expansion into new markets.”

As the Back Family Businesses campaign continues, Family Business UK will keep members up to date with our activity. For regular member updates, and to read our magazine, ensure you sign up, and contact the team with any questions or queries.