Responding to reports Labour intend to scrap Inheritance Tax Business Relief, Neil Davy, CEO of Family Business UK, said: “Such a move would quite simply have a catastrophic impact on the family business sector, which employs 14 million people in the UK”.
“Business Property Relief (BPR) – now known as Business Relief – was specifically designed to facilitate the handing of a family business from one generation to the next without creating a significant Inheritance Tax (IHT) charge which the business would be unable to pay. It is well designed and understood by business owners and gives them the confidence to invest and plan for their businesses to continue trading and providing employment after their death”.
“For business owning family members, the illiquid business assets form the bulk of their estate. Without BPR, the IHT liability would be borne by the business itself. This would require the family business to be sold, liquidated or broken up in order to raise the necessary cash to pay the charge. This would have clear knock-on effects on levels of employment in communities across the country, and the ability of the business to invest for the future”.
“85,000 family SMEs are expected to transfer ownership of their business to a new generation each year. BPR affords these firms an option to plan for a stable succession while maintaining ownership stability. It also plays a key role in ensuring that these small and medium firms can focus on scaling up their businesses. Around 77% of family SMEs are estimated to be first generation businesses”.
“Without BPR these family firms would lose the opportunity to grow under stable ownership and successfully transition to the next generation”.
“We agree that all reliefs must deliver for the taxpayer. Business Relief is a perfect example of a relief that achieves exactly what it was designed to: enabling family business to plan for the long term and ensure jobs and prosperity are protected from one generation to the next.”