The Institute for Family Business (IFB) is calling on the Chancellor to use his Budget on Wednesday to create an environment that gives family businesses the confidence to invest in future growth.
Reports that the Chancellor intends to review the Business Property Relief (BPR) in the upcoming Budget, are deeply concerning to the UK’s family run businesses. Family businesses employ over 13 million people and generate 28% of the UK’s GDP. Family firms continue to exist for generation after generation by innovating, adapting and looking for new markets and opportunities. They make investment decisions for the long term.
Every year 85,000 family SMEs are expected to transfer ownership of their businesses to the next generation. Removing BPR would force family run firms to pay a tax penalty on transfer, which others don’t have to.
Fiona Graham from the Institute for Family Business said:
“Family firms are the driving force across all regions, communities and sectors of the UK. Well over 80% of businesses in Yorkshire, the North West and the East and West Midlands are family owned. In those four regions alone family firms employ nearly four and a half million people.
“Inheritance tax relief is essential to their future prosperity. Scrapping it would have a catastrophic impact on family firms. It would lead to family run businesses being sold or broken up to pay an Inheritance Tax bill, with knock on effects on employment. It will also damage confidence in the sector, where families would reduce investment and always plan for the worst.
“The introduction of BPR positively impacted the health of family businesses and the wider economy by giving business owners the confidence to invest and expand.
“The majority of British businesses are family businesses. They are dependent upon BPR for their current and future prosperity. Any change to it would inevitably result in a decline in growth and investment coupled with stagnation in the number of new jobs being created.
“As the UK seeks to level up nationally in the coming years, the success of family businesses will be a crucial factor in doing so. In order to succeed and grow, they require a stable tax system and an economic environment. The future of the family business sector – and ultimately the Government’s ambitions for regional growth and investment – rely on maintaining BPR.”
The Institute for Family Business is the UK’s family business organisation, supporting and promoting the UK family-owned business sector through events, networking, representation, and thought leadership.
Two-thirds of British businesses are family businesses – ranging from multinational, multibillion-pound businesses to micro start-ups, the sector employs over 13 million people and contributes £182 billion in taxes.0