Building Resilience Will Be Key For Family Business To Cope

Nearly three quarters (73%) of family business owners are concerned about the impact of upcoming policy and tax changes on both their business and family plans, such as succession, according to research from Hymans Robertson Personal Wealth.

Family businesses must prioritise building resilience to help manage any unexpected policy and tax changes that arise in the next tax year, warns the leading financial wellbeing firm. With changes to areas such as Business and Agricultural Property Relief on the horizon, reviewing the strength of their business and personal positions early business owners can gain clarity and reduce risk, leaving them better prepared for the year ahead.

The research reveals that employment related tax (41%) and corporation tax (36%) are the biggest drivers of concerns around immediate cost pressures. At the same time, longer term taxes linked to ownership and exit, remain front of mind for family business owners. Over a quarter cite capital gains tax (28%) and state inheritance tax (26%) to be complicating long term decision making.

Hymans Robertson Personal Wealth says there are practical steps that owners should take to help them manage their concerns and support ongoing business decisions. These include stress testing cash flow and cost assumptions through scenario testing. Clarifying exposure to tax and policy change to see how the business would perform under different cost, tax or revenue conditions, would also be beneficial.

Commenting on the steps family business owners can take, Jeff Simpson, Head of Wealth Management, Hymans Robertson Personal Wealth:

“Family businesses are vital to the UK’s economy but in the face of uncertainty resilience is key to continuity. Recently, they’re facing real difficulty when it comes to deciding which changes to act on and how to plan with confidence."

"With rules changing infrequently, and the government often back tracking, this instability actively disrupts long-term thinking, making decisions around investment, ownership structures and succession much harder to commit to. These are the same decisions that once felt relatively straight forward, however owners may feel they’re harder to make now."

“Steps like scenario testing and clarifying the potential impacts of varying tax changes will help build an understanding of the resilience of their business and reinforce foundations that promote a forward-looking approach to planning. A proactive review can highlight things are perhaps no longer working as intended, or where small adjustments now could have a meaningful impact on future tax obligations or the smooth transfer of the business to the next generation."

"Owners should prioritise using available allowances, structure profits in the most tax efficient way, and check whether recent decisions may have unintentionally increased inheritance tax exposure. These are straightforward steps, but they’re often the ones that slip under the radar."

“Taking action early doesn’t just reduce risk; it opens more choice. The sooner business owners start assessing their positions, the more options they have to protect value, adapt their plans and put the family in a stronger position should new rules come into force. At a time when clarity is hard to come by, getting organised sooner helps families reinforce the foundations that support confident, forward looking planning and long term resilience.”

See the full report here.