Author: Alan Fitzwater

Confidence slips as businesses brace for “significant” tax rises  

Posted on by Alan Fitzwater

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

Posted on by Alan Fitzwater

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

Posted on by Alan Fitzwater

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

Posted on by Alan Fitzwater

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?

Posted on by Alan Fitzwater

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/ 

Large private companies continue to favour Wates Principles

Posted on by Alan Fitzwater

Large private companies continue to favour Wates Principles

Today the Financial Reporting Council published its second assessment of the quality of reporting from private companies who have chosen to follow the Wates Principles.

The research, conducted by the University of Essex, shows that the Wates Principles continue to be the most widely adopted corporate governance code among large private companies.

Of the 1,815 large private companies in scope of the research, 547 (30%) chose to apply the Wates Corporate Governance Principles in 2021/22, with a combined annual turnover totalling more than £850 billion.

Sir James Wates CBE, said:
“I’m once again encouraged to see that more large private companies are choosing to report against the Wates Principles than any other option.”

“The improvement in the reporting quality we’ve seen in today’s report, while good news, shouldn’t distract companies from the need to reduce boilerplate reporting, which remains a primary concern. I urge boards to reflect on today’s report with open minds ahead of their next reporting cycles.”

Mark Babington, FRC’s Executive Director of Regulatory Standards, said:
“The popularity of the Wates Principles continues amongst private companies, who I hope put this report to good use in their efforts to produce meaningful and company specific reports.

“The research highlights the need for increased transparency and accountability among large private companies, particularly as they are a driver of growth in the UK and have a significant impact on the economy and on wider stakeholders.”

While there were some improvements in certain disclosure areas compared to 2019/20, companies continue to struggle with providing meaningful disclosures around key areas. These include defining company purpose, connecting that purpose to strategy, culture and values, and explaining how stakeholder engagement impacts board decision-making.

The report also suggests there is an over-reliance on “boilerplate” disclosures being used rather than disclosures that provide company-specific context. High levels of similarity were found between the corporate governance statements of different companies, and also between reports by the same company in different years.

Click here to download and read the full FRC report and FRC Press Release: “Large private companies continue to favour Wates Principles”.

Listen to the FRC’s “In Conversation” Podcast
The FRC’s latest In Conversation podcast episode features Sir James Wates OBE, Chair of Family Business UK, Kate O’Neill, Director of Stakeholder Engagement & Corporate Affairs, and Maureen Beresford, Acting Director of Corporate Governance and Stewardship at the FRC.

Join the panel as they explore today’s report and discuss the Wates Principles’ flexibility, challenges in meaningful disclosure, and the importance of stakeholder engagement.

Click here to access and listen to the Podcast.

Steering the Family Business Forward: A SaxBam Interview with Neil Davy, CEO of Family Business UK

Posted on by Alan Fitzwater

Steering the Family Business Forward: A Sax Bam Interview with Neil Davy, CEO of Family Business UK

Family Business UK (FBUK) CEO Neil Davy was delighted, earlier this month to be interview by Kate Ludlow, Managing Partner at Executive Search and Leadership specialists, and FBUK corporate partner,  Saxton Bampfylde.

Neil is the fourth interview in the series ‘Steering the Family Business‘ bringing views from leaders across family business in the UK – family and non-family, executive and non executive. With the intention that the series will encourage shared learning whilst increasing awareness of this vital part of our business fabric.

Neil’ shared his reflections on some of the potential new opportunities and ambitions for family owned businesses, particularly in the context of the lection of a new Government.

Family businesses are integral to UK society and economy and play an enormous role in so many different industries every day. The business model requires leadership that balances entrepreneurship with stewardship, risk-taking with longevity: not an easy combination.

At the very core of that is the focus on the people and a genuine commitment to culture and values, which cannot be underestimated.

Read the interview in full, here.

Saxton Bampfylde recently became a carefully selected corporate partner of FBUK, joining a select and top quality group of advisory partners.

Click here, to find out more about Saxton Bampfylde’s offer to Family Businesses.

 

FBUK Launches Back Family Businesses Campaign

Posted on by Alan Fitzwater

FBUK Launches Back Family Businesses Campaign

Family Business UK has launched a new campaign called Back Family Businesses – calling on family business owners, politicians, policymakers, and the public to support family businesses.

The campaign is a calling card for supporters to back family businesses in communities across the country and win new advocates for the sector.

The campaign launched with a focus on Business Property Relief and Gift Holdover Relief – the single most important issues to the family businesses represented by FBUK.

For the first time, a new report Planning for the Long Term sets out a detailed case for retaining BPR and GHR as lifeline policies which, outside of the family business sector are often unknown or misunderstood.

The campaign calls on supporters of family businesses to download and share digital content created for the campaign, and to engage with MPs and policymakers.

Neil Davy, CEO Family Business UK said: “Our campaign is an opportunity for people everywhere – regardless of whether they’re part of the family business sector or not – to back family businesses and share the story of their importance to our economy and society.”

“A change of Government naturally brings uncertainty for family business owners. But, with the right policies in place, family businesses can be the key to unlocking the Government’s growth agenda.”

Labour’s return to government, in an historic election win was built on a manifesto for growth and jobs.

Steve Rigby, Co-CEO at Rigby Group and Director of FBUK added: “The Government’s growth agenda is music to the ears of entrepreneurs, innovators and risk-takers up and down the country.

“With the right policy support, family businesses are well placed to turbo charge growth in every part of the UK delivering the long-term investment and good jobs our country needs.”

In the run up to the General Election, the Family Business UK Manifesto called for a commitment to retain BPR and GHR. In the weeks since the election FBUK has been communicating the same message to MPs, Minister and their advisers.

For media enquiries please contact familybusinessuk@secnewgate.co.uk.

END.

 

FBUK Writes to New Government

Posted on by Alan Fitzwater

FBUK Writes to New Government

Family Business UK has written to the newly appointed Chancellor of the Exchequer and Secretary of State for Business and Trade, to ensure the priorities of family-owned businesses are embraced within government.

In letters sent to Rachel Reeves and Jonathan Reynolds, FBUK has underlined the significance of family businesses to the UK economy and the importance of retaining Business Relief.

During the election campaign, reports surfaced that Labour could be considering changes to the Inheritance Tax regime and, specifically, Business Relief, which is a vital relief allowing family business owners to plan for the long-terms success of their business.

In the letters, FBUK urges Labour not to rush into making policy decisions that could have unintended consequences: “Scrapping business relief would be catastrophic for every one of the millions of family businesses in the UK, putting investment, jobs and growth at risk.

“The viability and prospects for the family business sector must not be compromised.” The letters go on to ask the new Government to “commit to fully consulting with family businesses, ahead of any changes, to avoid making policy decisions with unintended consequences.”

FBUK has enjoyed excellent working relationships with the previous government ensuring key issues affecting family businesses are considered and consulted on. FBUK has plans to engage with the new Government and has urged the new Chancellor and Business Secretary to embrace similar working relationships.

You can read our letters to Rachel Reeves and Jonathan Reynolds in full here.

For media enquiries please contact familybusinessuk@secnewgate.co.uk.

END.

FBUK Congratulates New Government

Posted on by Alan Fitzwater

FBUK Congratulates New Government

Family Business UK would like to congratulate the new Government on its historic election win and extend an invitation to work in partnership to create an environment in which family businesses can prosper.

Following the Labour party’s landslide victory, Neil Davy, CEO of Family Business UK said: “Having campaigned on a platform for growth, we are looking forward to working with Labour in government, on behalf of family businesses across the UK, to ensure the specific needs of family businesses do not get overlooked.

“90% of private sector firms in the UK are family-owned businesses, making up a significant portion of the UK economy.

Family businesses need policies that create stability, and which give them confidence to plan for the long-term, invest in their people, the communities in which they are rooted, and ensure their business can confidently be passed to the next generation.

“How the new Government achieves that and delivers growth for the economy has been the subject of much speculation. But, given the importance of family businesses to the economy it’s clear that if family businesses are allowed to thrive, the economy thrives.

“On behalf of all family businesses across the country, I extend my congratulations to Labour on returning to government and pledge to work with the new Chancellor and Business Secretary to ensure family businesses flourish for generations to come.”

For press/media enquiries please contact familybusinessuk@secnewgate.co.uk.

END.