Tag: Inheritance Tax

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 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/ 

FBUK Warns of Changes to Business Property Relief (BPR)

Posted on by Alan Fitzwater

FBUK Warns of Changes to Business Property Relief (BPR)

Family Business UK has responded to reports that Labour is considering changes to Business Property Relief, warning of the potential consequences of scrapping or amending BPR.

Speaking to The Mail about reported changes to the Inheritance Tax regime, FBUK Chair Sir James Wates said: “This puts hundreds of thousands of jobs at risk in a key part of the economy.

“The relief [BPR] allows companies to plan for the long-term. It raises the question of why someone would put themselves through running a business – as you live and breathe it if your name is above the door – if you face crippling tax bills.”

Reported changes 

The Mail, and other media outlets have reported in recent weeks that the Shadow Chancellor Rachel Reeves is under pressure from others in Labour to raise Capital Gains Tax (CGT) rates as part of an autumn Budget statement – should Labour form the next government.

These proposals also reportedly include changes to Inheritance Tax including making it more difficult to ‘gift’ money and assets.

Steve Rigby, FBUK Board Director and Co-CEO of Rigby Group added: “Whoever forms the next government must avoid policies with unintended consequences that put our businesses at risk. Family businesses are here for the long term.

“Up and down the country we support the communities and local economies in which we are rooted.

“Successive governments, for almost 50 years, have retained Business Relief, which forms part of the Inheritance Tax regime, knowing that it is key to unlocking the potential for investment, growth and jobs among family businesses.”

FBUK - Back Family Business SM Full square (Business Property relief)The importance of family businesses

Ninety percent of all private firms in the UK are family businesses. That’s 4.8 million companies employing millions of people and contributing more than £200 billion every year in taxes.

Our Manifesto sets out what FBUK wants to see from a new government. We would urge you to download it and share it with your local candidates in the General Election – and again with whoever becomes your local MP.

You can find information about all your local candidates, and how to contact them, at the Electoral Commission.

Back Family Business – Assets

FBUK has also produced a series of infographics to highlight the importance of the family business sector to the UK economy.

You are welcome to download these infographics to use on social media channels to help us spread the word about the importance of the family business sector.

We just ask that you tag us in any posts, so we can re-share, on LinkedIn and Twitter/X.