Paul Butler provides accountancy and taxation advice to owner-managed businesses and companies in the South West. He has a particular interest in family businesses working closely with a team of specialists providing advice on succession planning, restructuring and tax planning.
The South West has a greater concentration of family owned business and the impact they have on the regional economy is every bit as significant. They are the lifeblood of the economy and should be provided with as much help as possible to prosper, grow and survive the generations.
In our region, 89 per cent of all private sector firms are family businesses and there are around 474,000 family firms. These firms employ 1.2 million people, equating to 43 per cent of all employment in the area, notably higher than the UK average of 39 per cent. Family businesses are therefore a fundamental part of the region’s economy, and the communities where they operate.
If I were running a family business I would want to see some good news from Mr Hammond in the short term relating to reduced employment costs. In the past few years businesses have coped with auto enrolment and increases in the National Minimum Wage, while these are of course laudable things to do, they put pressure on businesses to cope. It would be good to see a redressing of the balance:
Increase the employer allowance
This is designed to help businesses to retain or take on new employees by reducing the national insurance contributions (NICs) they have to make and this could do with increasing again from £3,000. This would enable a business to continue to employ their existing staff on the minimum wage and still remain under the allowance for NICs or encourage expansion and increase the number of staff they employ.
Help with business rates
Increases eat into disposable income which could be better spent on investment and recruitment. This is particularly important given the low levels of confidence following Brexit and looking ahead to the longer-term effect of the devaluation of sterling in increasing supplier costs. There is also the complaint that the Government is not transparent enough in how it determines the rateable value, and decisions to appeal a rates decision can take a long time.
Clarification over Making Tax Digital
When and how it is going to affect my business? Will I have to train staff on new accounting systems? Will this increase my employment costs further?
In the long term, if family businesses are to thrive, It would be nice to see some funding available to help those who want to explore how the business could pass from one generation to the next, not only from a tax perspective and maintaining Business Property Relief, but also in training and support for the next generation.
Family businesses are always asking about ways to incentivise key members of staff who have the expertise to help the family run the business. With increased employment costs it would be good to see some other opportunities to help ‘lock in’ and incentivise staff other than share schemes, where the family business has no intention of being sold.
Family businesses support one in four UK jobs. They are the beating heart of the UK economy, generating a quarter of GDP and paying over £133 billion in tax each year. It is vital therefore that the Chancellor takes steps to support the long-term growth of the family business.