There is no ‘one size fits all’ approach when it comes to protecting family wealth, passing this to future generations in an appropriate way, and at the ‘right time’. Setting up a Family Investment Company (“FIC”) is increasingly a popular choice for successful family business owners as part of their broader succession and tax planning strategy. Planning with trusts has a significant role in protecting family wealth for future generations, however with limitations placed on the value which can be settled into trust this typically forms only part of a plan in which FIC’s increasingly feature. A FIC is a limited company like any other, but one which has been set up to manage and hold investments for the medium-to-long term benefit of future generations. They are typically funded by the founder transferring cash or assets by way of a loan, which are then invested by the FIC. On creation, family members and often family trusts are brought in as shareholders. The investments are usually equity portfolios or property. The founder shareholder generally maintains control over the investments and the payment of dividends, and invites other family members onto the board as appropriate. The Articles and Shareholders Agreement are drafted to protect the shares from sale outside of the family, making this type of structure more effective in a divorce or dispute. Profits and gains of a FIC are charged at corporation tax rates which are significantly lower than the equivalent income and capital gains rates charged on individuals . In addition, dividends received by the FIC may suffer no UK tax at all. The FIC is therefore very tax efficient where profits are being reinvested and the return on the investment can be significantly increased as compared to personal ownership. Rental profits also enjoy preferential treatment since companies can fully deduct loan interest against profits whereas this is now restricted for individuals liable to income tax at higher rates. The FIC shelters the investments from income tax until the company pays dividends and the savings can therefore be considerable. One of the main advantages of FIC’s are the Inheritance Tax (“IHT”) benefits. Once the FIC is set up, the increase in value is not part of the founder’s taxable estate. The initial capital can also be given away which (if survived by 7 years) reduces the founder’s exposure to IHT. As with any tax planning there are risks as tax rates and rules change. HMRC are also known to be reviewing IHT generally, potentially looking to impose lifetime tax charges on all gifts, which could include those within a FIC. Anyone considering this form of planning should therefore do so soon. The FIC structure is appropriate where the capital and income can be retained within the company for long periods, or indeed used as a structure to pass on to the next generation in the same way one would use a trust. What matters is establishing whether a FIC is appropriate for you and that it has been considered as part of your broader family wealth planning. About the Author - Lyn is a Corporate Finance Partner and Managing Partner of AAB’s Edinburgh Office and is the head of their Family Business team. Lyn has played a key role in the successful growth of AAB in the central belt thanks to her extensive experience in advising on acquisitions, disposals (including MBOs, MBIs), debt and equity fundraising, financial due diligence and valuations. She advises clients in a wide variety of sectors, including food and drink, technology, engineering, support services, professional services and IT.

A FIC is an investment vehicle with the main benefit being the ability to pass on wealth to the next generation whilst retaining some control. In this article, Rafael Ruiz of Birketts explains more about the investment vehicle and some of the rules around them. The starting point is forming a company with bespoke Articles of Association and a Shareholders’ Agreement. Generally, the directors are the parents and the shareholders are adult children. Day to day management, investment and dividend decisions sit with the directors. Although shareholders appoint directors, it is possible to retain control by creating different classes of shares with non-voting shares for the children. Different classes of shares can also provide flexibility around dividend payments. The FIC is structured to fit the needs and objectives of the family. A long term plan should be agreed at the start, often with the intention for the children to eventually take over the business and become directors. A FIC is similar to a trust in that it is possible to separate beneficial ownership and control. Unlike a trust, however, a FIC has no limitations on its lifespan and it can be easier to understand as more of us are familiar with how a company works. However, FICs and Trusts are not mutually exclusive as a family trust might be a shareholder of the FIC, to hold shares for grandchildren. A trust can provide an extra layer of control through trustees. Articles And Shareholders’ Agreement The Articles set out the rules of the company and are a publicly available document, whilst a Shareholders’ Agreement is a private agreement between the shareholders and the company. Amongst other things, it is possible to place restrictions on the transfer of shares, to keep ownership within the family. Tax Treatment Of FICs A FIC can be funded by share subscription, sale of assets or a loan, and there are likely to be tax implications. Income and gains can be accumulated tax efficiently within a FIC and it is possible to direct dividends to lower rate taxpayers. Profits are subject to corporation tax (not IHT and CGT which is the case with a trust), which normally presents a saving, although CGT has to be considered on the transfer of assets into the FIC. Even with increased corporation tax rates, FICs can still be tax efficient. Are There Any Limitations? Although the structure of a FIC can be easy to grasp, tax, applicable legislation and administration can be complex. There is potentially a double taxation of income if the profits are subject to corporation tax and then profits are distributed to shareholders and then subject to income tax in their hands. There are also normally tax consequences of extracting assets and winding up a FIC. For these reasons, FICs should be a long-term project. However, FICs remain a good planning tool, provided they are set up as a genuine investment vehicle. Birketts have experience of establishing FIC’s and preparing bespoke Articles and Shareholders Agreements to meet specific family requirements and scenarios. They can also provide advice on the tax implications of the FIC. Please contact them directly so that they can advise as to whether a FIC is right for you. DISCLAIMER – Please note that the content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact Birketts in the first instance. Law covered as at January 2023.

If family enterprise is a mindset, then being more mindful seems fundamental to this effort. Awareness changes everything: You can’t address an issue or work on something until you are aware of it. So if you aren’t cultivating awareness as a leader, in your family, and your enterprises then you are at greater risk. As a family dealing with exponential change and interdependency, Stephanie Kilroy at the Traynor Family Enterprise (an organization that self-identifies as a family enterprise) after having roles on the Family Council, in Human Resources, and on the Board of Directors, has created with broad support, a new and compensated role of Governance Director. That ability to step back and reframe things beyond the conventional way of thinking is increased by mindfulness, something Stephanie practices. The world today is changing, that certainly includes the worlds of family, family business and the emerging model of family enterprise. Here are the factors that are deeply redefining family business and more broadly, our lives: Exponential change, complexity, and increasing interdependency. One thought leader posits that we will experience 20,000 years of change in this century measured by today’s rate of change. As change amps up dramatically in all areas of life from technology to genetics to national security and even how we define family, remember: everything affects everything. Innovation and entrepreneurship. There is a need to more rapidly incrementally improve all that we do (we get app updates daily) but perhaps more challengingly we have to work to learn to not unduly resist breakthrough innovation. Families have to maintain values but not mistake innovation for lack of loyalty to the values. Reframing shareholder value to shareholder values. The bottom line may be that the singular focus on the bottom line may be coming obsolete. Increasingly traction is being gained by notions such as the triple bottom line (profits, people, and planet), as well as in the family wealth field, Jay Hughes four sources of capital (intellectual, social, human, and financial) shows there is a growing need for a more holistic way to define success for families working together. We believe that all these factors are helping to necessitate the emergence of a family enterprise model (to paraphrase the old adage: necessity is the mother of innovation). Over a quarter century of solid research in both the academic and medical realms have validated—for the Western mind, the legitimacy and benefits of mindfulness. It has become mainstream as evidenced by its presence everywhere from Google to elementary schools to top athletes-even the Navy Seals. In this world that borders on chaos, we as family members, but especially those of us leading our family (business) through change realize there are risks attendant to this new environment: We, perhaps especially Gen Y’s, don’t have time to reflect. White space, so necessary for reflection and creativity is becoming rare. Intimacy with oneself, in ones relationships, the present moment, and even with ideas is being lost. A subtle but profound point is that our unproductive or even unhealthy attachment to things is easier to miss (i.e. a growing blind spot). The benefits of mindfulness have been relevant for millennia, but never as much as today. One meditation teacher I worked with described meditation; considered the most direct route to mindfulness, as solvent for the ego. Who doesn’t know a leader that could use a healthy does of solvent for their ego (really couldn’t we all)? That greater awareness cultivates the ability to step back from a situation or system be that your own ego, your own organization, or your own family. How do you cultivate mindfulness? A full discussion of that may well be beyond this article but simple, secular mediation is the most basic and direct approach. Innovation and entrepreneurship: Mark Peters, CEO and President of Butterball Farms, Inc., has been a bold social entrepreneur who reframed the role of businesses in doing social good in communities through his highly innovative social entrepreneurial program The Source. This program has reframed how (family) business leaders can help develop the talent, careers, and lives of people in the state of Michigan and has become a model the state and federal government are very interested in replicating. Mark is a life-long learner, meditator, and creates time daily for reflection. If Family Enterprise is a mindset, then being more mindful seems fundamental to this effort. Everyone, especially the leadership needs to have an ongoing practice. Then analogous to getting in shape, this needs to be ongoing. It helps to start with an assessment, ongoing benchmarks, and stated goals (both process and outcomes). What better place to combine these essential elements of life: innovation and intimacy? Redefining shareholder value to shareholder values: The Luck Stone Company has invested a decade of adopting values-based leadership and seeks to develop its people. This work has led to the creation of their leadership institute which champions mindfulness for everyone both inside and outside the Luck Company. Their company mission is “Igniting Potential”. They are driven by why, by doing good to do well, and have a culture where the values drive the numbers- not vice a versa. As the world becomes more complex our leaders will have to be more evolved, more mindful. Family enterprises will always be more complex by their very nature. Thus if you as a leader aren’t cultivating your awareness with a mindfulness practice, you are missing out on a way to help yourself, your family, and your enterprises. FACT: Family Enterprise an emerging model This is an evolving term that families, practitioners, and scholars will help define, but my perspective is that family enterprise is a mindset that puts greater emphasis on the family being aligned, cohesive and developing a practice to be more agile in dealing with the challenges facing all its enterprises (be it a family office, a foundation, and/or multiple businesses). The mindset will shift the emphasis from the business to the family and seek to capitalize the family’s involvement to make it a strategic and cultural advantage. Research shows that the top 5% of leaders tend to have a daily reflective practice. FACT: White space and reflection for innovation and intimacy. Ori Brafman, author of The Chaos Imperative puts forth that one of the three aspects of creating an innovative culture is white space that he defines as time to reflect. White space is vital to creating, which is what innovation is: creating change that creates value. Perhaps even more important is reflection and being present. Intimacy requires that you be present. Reflection is how we put meaning to our lives.

Self-efficacy can be built by developing the emotional flexibility of employees, according to new research from Nyenrode Business University, VU Amsterdam and IE University Madrid. Self-efficacy, or in other words a person’s belief in their ability to succeed, is important to help employees be resilient in a fast changing environment. Developing emotional flexibility helps employees handle changes better and builds stronger mental health. According to Professor Dr. Nick van Dam at Nyenrode Business University: “Employee engagement worldwide is at an all-time low, research suggests that a majority of the working population are disengaged at work.” “Depression, stress and other problems related to mental health are an important cause of absence. Millions of work days are lost each year due to mental health issues making this the leading cause of absenteeism at work. Additionally, the current pandemic situation demands flexibility and resilient. Learning new skills and adapting continuously can result in a lot of pressure and insecurity. Developing self-confidence to handle this and to continue to learn new skills is essential for sustainable employment and participation in society.” Dealing with ongoing change, asks for skills that help employees become comfortable with discomfort. Emotional flexibility, also called ‘Acceptance and Commitment Training or Therapy’ (ACT), includes a set of skills that teach dealing with stress and discomfort. ACT is evidence based and successfully applied within clinical therapy and proven effective for treatment of depression, anxiety and chronic pain. These skills have also been effective at a small scale in the working context, but were not yet researched amongst knowledge workers. However, this new research amongst knowledge workers in Germany proved that these skills can be trained and additionally increase self-confidence of employees and through that resilience. Dr. Jacqui Brassey, fellow researcher at VU Amsterdam and Global Director Learning at McKinsey & Company indicates: “There is a fast increasing need in society for skills related to self-confidence and emotional flexibility. There should be increasing training in the areas of emotional intelligence and flexibility but these trainings often remain optional." "This research emphasizes the urgency, effectiveness and feasibility of training in the area of self-confidence and emotional flexibility.”

Organisations have a responsibility towards their staff. The expression "mens sana in corpore sano", usually translated as “a healthy mind in a healthy body,” is truer than ever during this pandemic. In particular, prolonged confinement and reduced socialisation have brought mental health issues to the fore. Manfred Kets de Vries shares his thoughts on mental health in the workplace and some of the signals to look out for amongst staff. Recently, one of my clients told me that just before the pandemic, one of his colleagues showed up for work looking extremely distressed. He started emptying his office, giving a number of small decorative items to an assistant. Nobody had the courage to ask him why he was acting like this. The next day he didn’t show up for work, nor did he answer his phone. After a few days, the firm contacted his daughter, who sadly discovered that the man had killed himself at home. The man’s suicide had an impact on everyone who knew him. My client said that many people in the organisation felt guilty for not having recognised – or perhaps ignored – their colleague’s signs of mental distress. Instead of dealing with the discomfort of this person’s strange behaviour, they chose to play ostrich, refusing to face facts. Although this example may be an extreme case, for many people, mental health isn’t an easy subject to talk about, at home or at work. Many employers are unaware of how widespread mental health problems are. Even when they are aware, they don’t know how to deal with such issues. Far too often, discussing a person’s mental state is taboo. But from an organisational perspective, not paying attention to the mental health of employees can be very costly. Globally, the total productivity costs of mental distress reach US$1 billion per year. Shedding Light On A Problem That Isolates Its Victims For too long, we have swept the topic of mental illness under the carpet, hoping that it will just go away. But given the heightening of mental health issues in these trying times, we need much more openness, transparency and understanding. According to the World Health Organization, one in four people in the world will be affected by mental disorders at some point in their lives. Mental ill health can range from feeling “a bit down” to common symptoms such as anxiety and depression, to more severe (but thankfully rare) conditions such as psychotic episodes, bipolar disorder or schizophrenia. Even if you don’t struggle with mental health issues yourself, you probably know someone who does. Despite the range of available treatments, nearly two-thirds of affected people never seek help from a health professional, mostly due to fear of stigma. Many view suffering from a mental disorder as a personal failure. They feel embarrassed and worry that others may think that they are crazy. Some may also find it difficult to articulate what’s going on inside them. Keeping An Eye Open For Signs The earlier a mental problem is detected and treated, the better. Diagnosis, however, is not always easy. Generally, it’s the big or sudden changes that are noticeable. Gradual change often goes detected. A red flag should go up, however, when we can observe any of the following in our colleagues: Withdrawing from other people Losing interest in activities that previously seemed to be enjoyable A deterioration in work output, motivation level and focus Difficulties in making decisions or finding solutions to problems Significant changes in mood, energy or eating habits Substance abuse Treatment and coping mechanisms If we think that a person has mental health issues, a number of steps can be taken. The best plan of action is to help them seek out qualified psychological and medical care. It is often possible to arrange virtual consultations. Treatment for mental health issues often includes a combination of medication, psychotherapy and advice about healthy living skills (so the person can learn to help themselves). It is important to remind our colleague that seeking help is a sign of strength, not of weakness. Of course, when they start suspecting that they have a problem, some may say: “This can’t be happening to me. Mental health problems happen to other people.” Alternatively, they may engage in self-blame. In fact, close family members may also blame themselves. This blame game must be avoided. Remember that a mental health problem is not a life sentence. Many affected people learn to cope with their symptoms. Organisational Responsibility Given the long-term investment organisations make in their human capital, they need to take a proactive stand vis-à-vis mental health issues. They should send clear signals to their employees that they value them as people, not as cogs in a machine. However, this kind of communication is only going to be credible if the leadership of the organisation has created a transparent, safe and supportive culture. If not, employees are unlikely to open up to their managers when they struggle. There should be a clear safety net that enables employees to discuss problems, including mental health ones. Organisations that deal with mental health issues head-on usually have a zero-tolerance policy for discrimination based on mental health status. The basic principle is this: Mental health problems should be regarded the same as physical ones. Clear policies should be in place regarding sick leave and especially, the return to work. For example, an employee may need some form of flexitime or job restructuring. In some cases, the best course of action might be to assign the person a new manager with a different leadership style. In many instances, developing a plan that enables people to stay at work is more effective than suggesting a leave of absence. Being able to contribute, particularly in a supportive environment, can speed up recovery. With the greater emphasis on virtual work since the pandemic, virtual support is more important than ever. When The Workplace Is The Problem It is also possible that our workplace is precisely what is driving us crazy. In fact, mental health is very much determined by the degree to which we fit into the ‘system’ without showing signs of stress. To put it more dramatically, there are times when the only appropriate response to an unbearable reality is to go insane. The boisterous anti-war film King of Hearts (1966) tells the story of a World War I soldier sent to a French village to disarm a bomb left by the retreating German army. He encounters a strange town occupied by psychiatric patients who have escaped the local hospital after the villagers deserted the place. They immediately crown the new visitor their King of Hearts. Gradually, the soldier prefers the acceptance of the insane locals over the insanity of the war raging outside. It is a moral tale that organisational leaders would be wise to take to heart. About the Author - Manfred F. R. Kets de Vries is the Distinguished Clinical Professor of Leadership Development and Organisational Change and the Raoul de Vitry d'Avaucourt Chaired Professor of Leadership Development, Emeritus, at INSEAD. He brings a different view to the much-studied subjects of leadership and the dynamics of individual and organisational change. Bringing to bear his knowledge and experience of economics (EconDrs, University of Amsterdam), management (ITP, MBA, and DBA, Harvard Business School), and psychoanalysis (Canadian Psychoanalytic Society and the International Psychoanalytic Association), he scrutinises the interface between international management, psychoanalysis, psychotherapy, and dynamic psychiatry. His specific areas of interest are leadership, career dynamics, executive stress, entrepreneurship, family business, succession planning, cross-cultural management, team building, coaching, and the dynamics of corporate transformation and change. Manfred F. R. Kets de Vries directs The Challenge of Leadership Executive Education programme.

Fear is a primal emotion that has characterised human nature from the very dawn of evolution. It is a basic yet crucial emotion that is important to survival, triggering a response designed to keep us safe from threats and dangers. In this respect, it is fair to say that it is a valuable sentiment to experience from time to time, as it guarantees we are as secure as can be in specific circumstances. We spoke to Dominic Fitch, Head of Creative Change at Impact International , a leading experiential learning company, working to support global brands to prosper, by delivering customised people solutions to explore how to move past fear culture and build a brave, new world of work. Problems arise when fear becomes a constant burden. This is particularly true if it happens in the workplace. Fear can instil sentiments of stress and anxiety, accounting for up to 60% of work absences during the year and costing companies an average of £666 per worker. Not only that, but it can also affect the efficiency and productivity of the business on the whole. Hence, it is important for leaders to find ways to help employees overcome fear in the workplace. Here, we explore how business owners and managers can support fearful team members by building a braver, healthier environment. Show empathy and build trust One of the most important responsibilities of a business owner or manager is to establish a relationship of trust with your employees. Indeed, trust is the gateway to teamwork, collaboration, and high morale, acting as a powerful tool for decreasing feelings of fear and stress. When your team lacks trust, they are likely to live in constant anxiety. When people feel they can’t allow themselves to be vulnerable, they may end up concealing their worries rather than speaking up and asking for much-needed help. To build a sentiment of trust within the workplace and nurture team development, it is crucial to demonstrate empathy and emotional intelligence. Remind your employees that you are there to provide support and assist them along the way. Point out that anyone can have a bad day or experience moments of uncertainty. Also, be honest and transparent and consider letting them know from time to time if you are feeling worried or scared too. This is likely to create a stronger connection and, ultimately, high levels of trust. Normalise fear Let’s not beat around the bush: from CEO to apprentice level, everyone is bound to have reservations around some specific aspect of their job. Some may feel uncomfortable giving a presentation in front of their colleagues, while others may be pressurised by urgent, last-minute tasks. Sharing that everybody has their own worries can help decrease the intensity of fear within your team. In fact, it normalises the experience and makes your people realise that they are not alone. Moreover, you may want to encourage them to recognise sentiments of fear as part of the process, while also highlighting that they are only temporary. Incite your staff to speak to fellow co-workers and supervisors, and allow them to have an open discussion about how they have conquered fears in their professional careers. This will boost your team’s confidence and help them move forward. Create vision and make your intentions clear Another good way to limit feelings of fear in the workplace is to set a solid organisational vision and offer clear instructions when needed. In fact, some employees may experience increased sentiments of stress and anxiety if they do not know what is expected from them. By defining the end goal and their role in that, and by providing workers with the right instruments, business owners and managers can effectively nip this problem in the bud. Not only that but, in certain circumstances, it could be wise to explain the reasoning behind your decision-making to your team. For instance, if you are hiring a candidate for a new role, some team members may worry about how the change will affect them. Some people may be concerned that it’s because they are not performing well enough, which may therefore knock their confidence. Hence, outlining your intentions can prevent sentiments of fear from the outset. What’s more, your employees will be more likely to support and understand the decisions you make. React amicably to news and disagreements There may be certain instances in which, however, your team will not agree with the actions you take to tackle a problem. If this happens, make sure you don’t shrug off your employee’s opinion or react negatively. Firstly, this might lead to narrow-minded and short-sighted decisions. Secondly, and perhaps more importantly, your team may be less likely to disclose any issues or uncertainties they may have in the future. This is because they may be afraid of receiving an abrupt response. Likewise, if your workers come to you with negative news, make sure to stay lucid. Things don’t always go to plan and there will often be options you can try to improve the situation. By embracing the right attitude and thanking your employee for informing you promptly, you can nurture a positive environment that leaves no room for fear. It is only normal to experience fear and worry from time to time. However, workplaces should be made welcoming and collaborative to truly drive productivity and efficiency. From building relationships of trust and normalising stress to making your intentions clear and allowing for disagreements, there are many steps you can take as an owner or manager to limit sentiments of fear within your company.

When we envision a family business, the images of unity, prosperity, and success often come to mind. However, the untold realities paint a different picture—one that includes tough conversations, disagreements, and the potential for disharmony. In this article, we delve into the intricacies of navigating tough conversations within family businesses, providing a guide for family members to master difficult dialogues and foster harmony. Tough Conversations: The Expected Reality In the realm of family businesses, the expectation of tough conversations is not uncommon. Disagreements, disharmony, and occasional disconnection are part of the package. These challenges, if left unaddressed, can become significant barriers to both the success of the business and the well-being of family relationships. Strategies for Success 1. Open Communication: The Foundation of Harmony Open and honest communication is the cornerstone of resolving conflicts within family businesses. Establishing a culture that encourages transparent dialogues can pave the way for addressing challenges before they escalate. Family members should feel comfortable expressing their thoughts and concerns without fear of judgment. 2. Active Listening: Understanding Perspectives Mastering difficult dialogues requires more than just speaking; it requires attentive listening. Each family member brings a unique perspective to the table, and actively listening to those perspectives fosters a deeper understanding. This, in turn, can lead to collaborative solutions that consider everyone's needs. 3. Seeking Mediation: A Neutral Third Party In instances where conversations become particularly challenging, seeking the assistance of a neutral third party can be invaluable. A mediator trained in family business dynamics can help navigate the emotional terrain, facilitate discussions, and guide family members towards mutually beneficial resolutions. The Reality of Mixing Love and Money Owning and working with family businesses for over four decades has revealed the often-unspoken truth: what happens in the boardroom can spill over into the living room, potentially derailing both the business and the family. Mixing love and money, while rewarding, comes with its unique set of challenges that few are prepared to address. While the challenges are real, proactively managing the 'family' part of the family business can change everything. It involves: Education : Equipping family members with the tools to understand and navigate the complexities unique to family businesses. Clarity : Establishing clear communication channels and expectations to prevent misunderstandings. Conversations : Regular, open dialogues that address potential issues before they become insurmountable challenges. Thriving Together The path to mastering difficult dialogues in family businesses involves a commitment to open communication, active listening, and proactive management. Families can thrive together by embracing the reality that challenges will arise but can be navigated successfully with the right strategies and mindset. With education, clarity, and conversations, family businesses can not only weather the storms but emerge stronger and more connected on the other side. About the Author: John Broons is a globally awarded family business expert. One of only three people in Australia to hold the coveted title of Fellow of Family Firm Institute (Boston, USA), John has dedicated his working career to answering the question: how do I guide and support families in business to a place where they’re thriving? Find out more by visiting his website here

Family Business United has written to the Chancellor of the Exchequer to voice the concern of the family business sector in light of the changes announced in the Autumn Budget following discussions with numerous members and consultation with other members of our community. Further letters were sent to other key figures including Kemi Badenoch MP, the leader of the Opposition. As Paul Andrews, Founder and CEO of Family Business United explains, "As the CEO of Family Business United, an organisation that champions and celebrates the significant contribution of family firms across the UK, I had no choice but to write to express my utmost concern for the recent announcements in the Budget which are already having significant consequences for British family firms." "These changes are a once in a generation change in direction for the family business sector and have serious consequences for many, at a time when many are having to deal with plenty of other challenges too." "We have already heard from businesses that have had significant increases in their National Insurance Contributions, are dealing with increased business rates and changes to the National Minimum Wage and now have to potentially fund large IHT liabilities as a result of changes to BPR and APR. These businesses are reducing their expenditure, cutting back on CAPEX projects and scaling back investments, as well as reviewing their approach to bonuses and pay rises this year. The effects will be reduced investment and less growth and will have a detrimental impact on the economy," concludes Paul. Read the letter sent to Rachel Reeves here:

The 2024 UK Budget introduces a significant change to inheritance tax (IHT) rules that could reshape financial planning for family business owners. From April 2027, pensions will now be included under IHT assessments, posing new considerations for those aiming to pass on wealth efficiently. For many, pensions have been a key component of inheritance tax planning, but these changes mean it’s time to reassess how retirement savings factor into broader legacy and succession strategies. What’s Changing With Pensions And Inheritance Tax? Until now, pensions have been exempt from inheritance tax, allowing individuals to pass on retirement savings to loved ones without additional tax burdens. However, starting in April 2027, pensions will fall within the IHT regime and be subject to a 40% tax rate in line with other assets. There has been no change to the inheritance tax threshold of £325,000 with assets within this threshold incurring no tax liability. This shift may impact retirement and succession planning for family business owners who were counting on pensions as part of their wealth transfer strategy. What Family Business Owners Should Consider With pensions going to be subject to IHT, family business owners should consider taking a fresh look at their financial plans. Here are some essential steps to consider: Reassess retirement and wealth transfer plans Pensions have traditionally offered a tax-efficient way to pass on wealth, but the new IHT rules will change that dynamic. Assessing the impact on your estate and understanding how these changes will affect both personal and business assets is key. Calculating potential tax liabilities now can help you determine if new strategies are needed to protect your family’s legacy. Consider alternative wealth transfer strategies With pensions now facing a 40% tax rate, family business owners may need to explore other options, such as trusts, lifetime gifts, or asset restructuring. Each strategy has different implications, so consulting a tax or wealth adviser who understands family businesses can be invaluable in selecting the right approach for both personal and business goals. Prepare for business continuity The added IHT on pensions may create a need for liquidity to cover tax costs, which could otherwise place pressure on the business. Developing contingency plans—such as setting up insurance policies or creating a reserve fund—can help prevent the need to sell business assets, ensuring smooth generational transitions without disruption. Looking Forward Although the changes to pensions and inheritance tax present new challenges, there are ways to navigate these shifts effectively. By taking the time to review financial plans, exploring alternative wealth transfer strategies, and ensuring adequate liquidity for potential tax costs, family business owners can protect both their legacy and their business’s stability. With thoughtful planning and the right guidance, family businesses can continue to thrive across generations, adapting to the new tax landscape while safeguarding their future. About the Author - Jeff Simpson is a Chartered Financial Planner at Hymans Robertson Personal Wealth. Find out more by visiting their website here     The contents of this article is for general information purposes only and should not be regarded as financial advice. It should not be considered a substitute for regulated advice on specific circumstances and objectives. Watch an on-demand webinar , where Jeff Simpson from Hymans Robertson Personal Wealth and tax expert Anthony Whatling from Alvarez & Marsal, discuss the various outcomes of the Autumn Budget and their implications for family business owners. It is for general information purposes only and should not be regarded as financial advice. It should not be considered a substitute for regulated advice on specific circumstances and objectives.

More than 250,000 people have backed the NFU’s campaign to reverse the family farm tax, signalling to the government that the public disagrees with the cruel, ill-thought-out policy. The NFU campaign attracted an increase of 50,000 signatures over just two days in the lead-up to and after the NFU’s mass lobby of MPs in Westminster on 19 November. NFU President Tom Bradshaw said: “I want to send a heartfelt thank you to the public from the whole farming community for backing our campaign to overturn the family farm tax. At a time when farmers believe government has lied to them and let them down badly, British farmers and growers are heartened to know that they have the support of so many members of the public." “Earlier on in the year the public decided farming was the second most trusted profession in Britain after only nursing. This milestone of support is further confirmation that the public values British farmers and growers for all they provide and believes they deserve more than this badly designed and poorly targeted policy that could decimate working family farms across Britain." “Ministers must rethink the changes to Agriculture Property Relief and Business Property Relief and protect the people they say they want to. If they don’t, they risk reducing our food security and potential food price rises for shoppers as the cost of producing food increases.”

Data commissioned by the NFU has shown Labour is not trusted by its 2024 voters on issues surrounding the impact of the Budget on farmers. The polling, carried out by Portland this week, shows that changes to inheritance taxation on family farms are unpopular, and that perceptions that Labour does not value rural voters as highly as urban ones are building. The data shows that two thirds (65%) of the public do not think that the Government has fully considered the impact of its planned changes on family farms. In the days since the Budget, the NFU has repeatedly said to Treasury and government that its figures justifying the Family Farm Tax are wrong and will devastate family farms, putting many out of business. Government suggests 27% of farms will be affected by changes to Inheritance Tax (IHT), namely Agriculture Property Relief (APR). In sharp contrast, the NFU has demonstrated more farms will be impacted and has released data showing 75% of farms stand to be above the £1m Family Farm Tax threshold. New polling, released today, shows the British public agree with the NFU, with only 27% supporting the Family Farm Tax. Other results show: IHT on farms is the joint most unpopular measure in the Budget, tied with changes to pensions Two thirds (65%) of the public do not think that the Government has fully considered the impact of its planned changes on family farms IHT on farms is ranked the second least popular budget measure among 2024 Labour voters, with (21%) picking it, fractionally less unpopular than IHT on pension pots (22%), 49% of 2024 Labour voters think that either IHT on farms and businesses is unfair. Only 11% felt IHT on farms was among their most favoured budget measures. Only 17% of voters trust the Chancellor most to tell them about the impact of this policy on farms, with 52% trusting ordinary farmers to tell them the truth. 49% of voters think the government is biased against the countryside, with only 26% disagreeing IHT on farms is also at the bottom of things which are popular with the public – just 8% agree with it. NFU President Tom Bradshaw said: “I am not surprised by this data. It shows the level of support for British farmers from people across the country. This is echoed with the 255,000 people that have so far signed our petition to Stop the Family Farm tax. Unfortunately for this new government, it also shows that, on the issue of changes to Inheritance Tax to working family farms, the majority of people are with us and believe this an unfair move." “From the work we have done with financial experts formerly of the Treasury and Office for Budget Responsibility (OBR), we know 75% of farms could be impacted by changes to APR and Business Property Relief (BPR). While the two go hand in hand, for many working farms, the Treasury has chosen not to count this as part of its planned Inheritance Tax changes, therefore skewing the impact the changes will have, resulting in the confusion and uncertainty which has played out in the media in recent days." “But I am certain, as are the 1,800 NFU members that joined me on Tuesday for our mass lobby, with well over 10,000 farmers on the streets of Westminster, calling on their MPs to back our demands to halt the current budget madness, to carry out an urgent and full review of the correct data and draw better conclusions." “Without this change, farmers will be forced to sell off parts or all their farm businesses to pay huge tax bills, with added cost for pensions and life insurance. All this puts additional costs to food producing businesses which are already operating on paper thin margins. Together with changes to the National Live Wage and National Insurance, I can’t see a scenario where food prices don’t rise, at a time when the public have already been hammered by a cost-of-living crisis." “My message to government is clear; look at the evidence, stop this family farm tax and show your electorate you’re on their side.”

The UK Budget 2024 has introduced significant reforms to Agricultural Property Relief (APR) within the Inheritance Tax (IHT) framework, creating major implications for British farmers. APR has long been a vital tool for enabling family farms to pass to the next generation with reduced tax burdens. However, the upcoming changes mean that larger farming estates could face higher IHT liabilities, potentially threatening their financial sustainability. These reforms have already sparked concern across the farming community, with recent protests at Westminster drawing attention to the profound challenges they could bring for agricultural businesses and family legacies. For farmers, understanding the new rules and planning accordingly will be critical to adapting successfully to this shifting tax landscape. What’s Changing With APR? Previously, APR allowed farmers to pass on agricultural property without incurring inheritance tax, facilitating the transfer of farms across generations. Under the new rules however, from April 2026, full 100% relief will be limited to the first £1 million of combined agricultural and business property. Assets exceeding this threshold will be subject to a 20% inheritance tax rate, a reduction from the standard 40% inheritance tax rate. Undoubtedly, these changes introduce substantial IHT liabilities for larger estates, posing challenges for succession planning. Key Considerations for Farmers 1. Assess the Value of Your Estate Calculate the value of your agricultural property and other assets to understand your potential tax exposure. Estates exceeding the £1 million APR cap could face 20% IHT on the portion above the threshold, potentially creating significant financial burdens for heirs. 2. Plan for Liquidity To meet IHT obligations, families may need to sell land or other assets. Ensuring liquidity through savings, investments, or life insurance can help cover tax bills without disrupting farming operations or threatening the farm’s future. 3. Reassess Your Succession Plans Early planning is now more important than ever. Options such as gifting assets, establishing trusts, or restructuring ownership can help reduce tax liabilities while ensuring a smooth transition for the next generation. 4. Evaluate Diversified Assets Farms with non-agricultural ventures, such as holiday lets or renewable energy projects, may find these assets do not qualify for APR. Reviewing how such assets are held and taxed can help mitigate potential liabilities and clarify their role in your succession strategy. Looking Ahead The APR changes introduced in the UK Budget 2024 underline the importance of proactive inheritance planning. By evaluating your estate, ensuring liquidity, and preparing succession plans, farmers can adapt to these changes and protect their legacies. Seeking support from a financial adviser can be invaluable in navigating these complex changes. A professional can help tailor strategies to your unique circumstances, minimise tax liabilities, and secure a stronger financial future for your family and farm. About the Author - Jeff Simpson is a Chartered Financial Planner at Hymans Robertson Personal Wealth. Find out more by visiting their website here     The contents of this article is for general information purposes only and should not be regarded as financial advice. It should not be considered a substitute for regulated advice on specific circumstances and objectives. Watch an on-demand webinar   where Jeff tax expert Anthony Whatling from Alvarez & Marsal, discuss the various outcomes of the Autumn Budget and their implications for family business owners.