Four out of five family-owned businesses have accused the Labour Party of misleading voters about its tax plans, according to a survey by Family Business UK.
The trade association has voiced significant worries about potential alterations to established tax reliefs, especially business property relief. This relief permits families to transfer business assets with lower or no inheritance tax.
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. Research by the organisation suggests that many family businesses could face severe consequences if tax reliefs are cut, with some being forced to freeze recruitment or sell off assets to manage the increased financial burden.
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, which has been in place for decades, allows businesses to be transferred across generations with either a full or partial reduction in the standard 40% inheritance tax rate.
Davy criticized the government for causing uncertainty, stating that numerous family businesses are postponing essential investment decisions as they wait for confirmation on the future of tax policies in the impending October 30 budget.
The survey by Censuswide revealed that over a third of family businesses anticipate substantial tax increases in the budget. In response to the rising costs, 27% are considering halting recruitment and 12% are contemplating layoffs. Additionally, a quarter of those surveyed expressed that they would put key investments on hold.
The association, representing 200 of the UK’s biggest family businesses like Wates, NG Bailey, Bettys, Taylors of Harrogate, and Rigby Group, has called on the government to uphold the existing tax reliefs. This is to safeguard family-owned enterprises and their significant contribution to the UK economy.
