Neil Davy, chief executive of Family Business UK, warned that Labour's tax policies could endanger the future of family-owned enterprises, which employ 13.9 million people and contribute over £200 billion annually in taxes. If tax reliefs are cut, many family businesses could face severe consequences, potentially leading to recruitment freezes or asset sales to handle the increased financial burden. This creates serious risks for the sustainability of these essential businesses.
The most alarming finding is that one-fifth of family businesses may be forced to close or liquidate to pay the inheritance tax charges if business property relief is reduced or abolished. This relief has allowed for the transfer of businesses across generations with either a full or partial reduction in the standard 40% inheritance tax rate, and its loss could significantly impact the legacy of family enterprises.
A survey conducted by Censuswide found that over a third of family businesses expect significant tax hikes in the budget, with 27% planning to freeze recruitment and 12% considering redundancies to cover rising costs. Alarmingly, a quarter of respondents indicated that they would pause key investments. This demonstrates the adverse effects that the uncertainty surrounding tax policies is having on these businesses and their ability to grow.
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