Budget Comment – Inheritance Tax Changes – Family Businesses

Budget Comment – Inheritance Tax Changes – Family Businesses

Immediate Release.

Neil Davy, Chief Executive Officer of Family Business UK said: “These changes are a betrayal of Britain’s hard working family business owners and farmers that will result in valuable businesses being closed, sold and jobs lost across the country. 

“For all but the very smallest companies the changes to Business Property Relief are much the same as scrapping it entirely. Far from raising money for the Exchequer our research has shown that removing the reliefs will cost money – with a £29billion cut in economic activity and 391,000 jobs lost. 

“On top of changes to Employer’s National Insurance, employment rights, and living wage, this is yet another burden heaped on Britain’s 4.8 million family owned businesses, and removes entirely any incentive for starting or running a family business. 

“Inheritance tax reliefs are not loopholes, they are legitimate tax policies, introduced by a Labour Government in 1976, to ensure that businesses do not have to be broken up on the death of the owner, to the detriment of all the remaining employees, suppliers, customers, investors, the Treasury and wider economy. 

“These changes effectively seize 20% of the capital of private trading companies saddling them with tax bills that, in most circumstances, cannot be met without selling the underlying business.

“Those inheriting a family business simply do not have 20% of the business value lying around in cash. This change will see a steady succession of family business sold or their underlying assets broken up to satisfy these ill-thought out policy changes.” 

ENDS.

Contact the Family Business UK Press Office here.

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.