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/