Confidence in Labour hits rock bottom as businesses are bracing for ‘significant’ tax rises – London Business News | Londonlovesbusiness.com

Eighty five per cent of business leaders say they expect the government to increase business taxes in the Budget with 35% fearing significant tax rises according to research carried out by Censuswide.

Rises in Corporation Tax were identified most often by businesses, despite a pledge in Labour’s manifesto not to increase it. Others include Business Rates, Capital Gains Tax and Employer’s National Insurance.

More than a quarter (26%) of businesses say they feel less confident about the outlook for their business since Labour won the election.

The poll by Censuswide and commissioned by Family Business UK includes several different types of business ownership models, including PLCs, family businesses and private equity-backed firms. It reveals a marked difference in sentiment among Britain’s family business owners compared to other business models

52% of family-owned businesses polled rate the Government’s business policies as unfavourable and four out of five don’t believe the Labour Party was honest with voters about their plans for tax rises in the lead-up to the election.

There has been speculation about whether Labour could scrap Business Property Relief (BPR) in the Budget – a vital policy that underpins family businesses. 67% of family firms say the policy is either important or essential to their business and removing it from the budget could result in them selling assets (31%), being sold completely (20%) or liquidated (20%) to cover additional costs.

Neil Davy, Chief Executive Officer of Family Business UK said, “The Chancellor used her speech a Labour Conference to repeat a pledge to not increase the rates of Income Tax, National Insurance or VAT. But a running commentary about the budget deficit and the need to increase other taxes, is extremely damaging for business.

“The Chancellor wants growth and Investment. Our members want that too. We hear that businesses are more confident because the Government has brought back stability. But that’s not what our research indicates – particularly for family businesses who are fearful the Government may be about to pull the rug from under them, removing tax policies that underpin their very model of ownership.”

The need to retain business property relief

Ongoing uncertainty around whether the new Government will scrap or amend BPR means that family firms are extremely concerned. More than 70% say unfavourable policies will lead to lower profits and almost two thirds (63%) say they will not increase headcount in the next 12 months.

Family businesses are the beating heart of the economy, operating in every corner of the country. Britain’s 4.8 million family businesses support thriving local communities up and down the country, employing 13.9 million people and contributing more than £200 billion in taxes every year.

The model of family business ownership, which can see companies thrive for hundreds of years, is supported by a long-established policy known as Business Propery Relief, or Business Relief (‘BPR’). The policy, first introduced in 1976 by the then Labour Government, has been retained by successive governments since and is widely recognised as providing a lifeline and level playing field for family firms to invest over the long term.

Each year, around 85,000 privately owned family businesses change hands when the owner dies or chooses to retire. BPR allows those businesses to continue trading, without interruption, when other family members take on the responsibility for running them. It means that neither they, nor the business is subject to additional taxes, or costs which, in most cases, are borne by the business. Non-family-owned businesses incur no tax penalty when ownership changes.

Davy added, “Our survey clearly shows the growing pressure family business are under due to uncertainty around potential tax rises and ongoing rumours about scrapping of Business Property Relief at the next election.

“While the Government allows this uncertainty to continue, Britain’s family business feel in limbo and important investment decisions are being put on hold.

“I would urge the Chancellor to ignore the voices of vocal minority who believe that BPR is a loophole for the wealthy, and would see it scrapped, and instead listen to us and our members about how it underpins an entire sector of the economy.

“Business Property Relief is not just a tax policy, it’s a commitment to fairness, opportunity, and the future of British enterprise. We would urge the Government to protect it or risk potentially catastrophic consequences of lost jobs, growth and prosperity in every constituency across the country.”