Budget 'Storm' Undermining Legacy, Growth & Stability

Bayes Business School family business expert says Budget risks undermining “legacy, growth and stability” of companies

Reacting to changes in inheritance tax treatment announced in yesterday’s Autumn Budget, Professor Ajay Bhalla, Professor of Family Business and Innovation at Bayes Business School says the move could jeopardise the long-term health of existing family-run organisations, as well as stifling a major contributor to the UK economy and growth.

Professor Bhalla said: “The budget’s introduction of a 20% Inheritance Tax (IHT) on assets over a £1 million threshold for family business successors could have serious consequences."

“Embedded deeply in the UK society, family businesses are the backbone of the UK economy, accounting for more than 85% of all UK firms. Together, they contribute more than 40% of the nation’s Gross Domestic Product, create over half of all private sector jobs, and channel more than £225 billion into the UK’s public finances each year."

“It is well-known that these businesses are essential to the UK’s economic future. Yet, instead of encouraging their continued success, the Chancellor’s recent Budget risks destabilising them and, in the process, making an irreparable damage to the very fabric of UK society."

“There is no doubt among family business owners that this will make it much harder for the next generation to take up the mantle of keeping the company running, will certainly discourage reinvestment and threaten the long-term health of these vital firms.

“The new cap on Business Property Relief (BPR) and Agricultural Property Relief (APR) at £1 million further dampens the ambitions of family business owners, by making succession planning increasingly difficult."

“For first time in a generation, family business owners now face the prospect that their legacy, growth, and stability may be at risk due to policies that hinder succession and stifle the UK’s longstanding engine of enterprise.”