Family businesses make up the vast majority of businesses in the UK, employ millions of people, and playing a vital role in driving long-term investment, regional growth and stable employment. This document sets out a clear, practical policy agenda for creating a fairer, more competitive environment where family businesses can thrive today, and for generations to come.
Building Britain for Generations
A Policy Agenda for Family Businesses
Building Britain for Generations: A Policy Agenda for Family Businesses
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Building Britain for Generations: A Policy Agenda for Family Businesses
Contents
Foreword
4
Summary of Recommendations
6
Introduction
14
In Numbers: Key Statistics
16
Fair Taxation System
18
Accessing Finance and Business Support
22
Mid-Sized Family Business Focus: The Missing Middle
26
Investing in our Communities
28
Lowering the Cost and Complexity of Doing Business 30 Younger Generation Focus to Support Family Businesses 34 Closing Comments 39
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Building Britain for Generations: A Policy Agenda for Family Businesses
Foreword
Family businesses are the backbone of the UK economy, anchoring communities, sustaining jobs, and building prosperity that lasts across generations.
Family businesses have helped build Britain for generations. This report will discuss what needs to change to ensure that continues. As we take this agenda forward, I hope it inspires fresh conversations and genuine collaboration with all who share our ambition for a thriving family business sector. I look forward to working with partners, policymakers, and our Members to turn this agenda into meaningful, lasting change.
This document sets out a clear, practical policy agenda for creating a fairer, more competitive environment where family businesses can thrive today, and for generations to come. Family Business UK (FBUK) is the UK’s largest organisation dedicated to supporting, representing and championing family-owned businesses. Family businesses make up the vast majority of businesses in the UK, employ millions of people, and play a vital role in driving long-term investment, regional growth and stable employment. Our Members understand that real prosperity comes from reinvesting deeply in their people, their capabilities, and their future. They prioritise long-term growth, stewardship and succession over short- term dividends.
Steve Rigby, Chair Family Business UK
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Building Britain for Generations: A Policy Agenda for Family Businesses
We call it a ‘FAMILY first’ approach: F A M I
L Y
Younger Generation Focus The Government must create the business environment to enable senior owners to involve, educate and inspire the next generation to become the leaders of tomorrow, and create opportunities to invest in skills and training for the workplace of the future.
Lowering the Cost of Doing Business Family firms are facing significant increases in employment costs and general business taxation, alongside further regulations. We urge Government to create an environment where firms can grow as opposed to making regressive investment decisions.
Investing in our Local Communities Family firms are rooted in their local places creating good jobs, supporting local supply chains and investing in their communities. The right policy environment will amplify that contribution, not just enable it, with benefits for all.
Mid-sized Family Business Focus Government attention is skewed towards startups and unicorn companies, even though family businesses have huge scale-up potential that could generate significant growth for the UK. This overlooked engine of national productivity must be a key focus of Government to deliver lasting growth.
Accessing Finance and Business Support Family businesses need the right capital at the right stage, from early growth through to succession. Government funding and support programmes should be designed around that journey, not defaulted to a one-size-fits-all approach based on size or sector alone.
Fair Taxation System The UK needs a tax system that works for family businesses, not just listed companies and short-term investors. We urge Government to move away from a one- size fits all approach and build a tax policy framework that incentivises family businesses and catalyses the vital contribution that family businesses make to public services, regional economies, growth and job creation.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Summary of Recommendations
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Building Britain for Generations: A Policy Agenda for Family Businesses
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Building Britain for Generations: A Policy Agenda for Family Businesses
Stability and Forward Planning Create a clear Tax Roadmap to give businesses confidence about the direction of travel on tax issues. This Roadmap must include business and ownership taxes including Corporation Tax, Capital Allowances, Business Rates, Inheritance Tax and Dividend Tax. This clarity would allow firms to plan multi-year investments, succession arrangements and expansion strategies without the fear of sudden, damaging surprises. Summary of Recommendations F Fair Taxation system
Business Property Relief Reintroduce full Business Property Relief and Agricultural Property Relief to support continuity in family ownership. Reinstatement of full 100% Business Property relief, with no upper thresholds, could provide a tax surplus to the Treasury by unlocking capital investment and creating, and sustaining, more jobs. In the short term, Government should commission a full independent review of the policy, assessing the behavioural impacts on family businesses. This would enable Government to understand the impact and reconsider the policy.
Incentivising Management to Think Long Term Introduce a scheme similar to Enterprise Management Incentive/ Company Share Option Plan for family businesses – which allows efficient and simple equity incentivisation to help motivate key staff.
Business Rates Move to a progressive approach for calculating Business Rates. Under a new system each portion of the rates bill would be charged at the rate applicable to that specific band, rather than applying a single percentage to the entire amount. This is how Income Tax and Stamp Duty Land Tax work, enabling revenue and fairness to be achieved together. In the long term, the Business Rates system needs a fundamental overhaul to make it genuinely fair for family‑run, bricks-and- mortar businesses which act as the long‑term custodians of our high streets.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Summary of Recommendations A Accessing Finance and Business Support
Financial Products for family businesses
Start, Scale and Stay Provide better incentives for family offices to invest patient capital in other businesses looking to scale up. This will recycle capital from one set of successful family businesses into the next, enabling diversification and harnessing scale-up potential. Allow rollover relief for investing in private trading companies. If someone sells an asset and reinvests the money into buying shares in a UK private trading business, they should be able to roll over paying Capital Gains Tax as with the current Enterprise Investment Scheme (EIS) system, but without limits on the size of the company.
Export Finance and Business Support Create an Export Support and Finance ‘task and finish’ group to address the unique barriers family firms face. Convened by FBUK, DBT and UK Export Finance (UKEF), this would help more family firms take their first, or next, steps into international trade.
Mentoring Expand mentoring capacity for family‑owned firms by recruiting and training more mentors with direct family business experience into mentoring bodies such as MentorsMe.
HM Treasury and the Department for Business and Trade (DBT) should develop dedicated financial products for family firms and create a clear, easy-to-navigate ‘Family Business Products’ section within the Business Growth Service. Use the Government’s convening power of growth funding to ensure banks and lenders understand family governance models and expand growth capital funds which are tailored to non-venture-backed ‘asset rich/cash poor’ family businesses.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Summary of Recommendations M Mid-Sized Family Business Focus
A New Definition and Strategy Adopt a shared definition of medium-sized companies across all Government departments, to enable consistency of approach and focus. This should be those with revenues between £10 million and £100 million and 50 to 499 employees. Adopt a targeted strategy to support the growth and resilience of medium-sized firms. This should include a dedicated concierge/ account management service as the central access point for medium‑sized firms, providing streamlined guidance across support programmes, investment routes, and regulatory processes.
Export Finance for Mid-Sized Firms
Assess the utilisation and impact of export funds, twice yearly, to ensure that support for international trade continues to deliver measurable growth outcomes for private and family-owned businesses. University Collaboration with Mid-Sized Family Firms Ensure UK Research and Innovation implements the recommendations within the ‘Deepening University- Investor Links’ report in a way that broadens university–business collaboration beyond spin-outs and venture-backed firms.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Summary of Recommendations I Investing in our Communities
Local Procurement to Support Family Businesses
High Streets Introduce tax relief for family businesses which invest in their communities – for instance if they invest in community spaces or measures to reduce the level of business crime. This could be similar to the current tax relief system where individuals can donate to Charities or Community Amateur Sports Clubs. Further Devolution Implement a new wave of fiscal devolution led by new and existing Mayors. All Mayors should have family business representation on their Business Advisory Council or appoint a ‘family business czar’.
Simplify the procurement system to place greater weight on social value, local presence and long-term delivery capability in Government and local Government tenders. The new Office for the Impact Economy 1 should work closely with Department for Business and Trade and the wider Cabinet Office to make these changes. Introduce proportionate financial and insurance thresholds aligned with contract risk and improve transparency and feedback mechanisms to support continuous improvement by family business bidders.
1 Office for the Impact Economy – provides a single front door for impact investors, philanthropy and purpose-driven businesses to partner with the Government and grow their social impact across the UK
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Building Britain for Generations: A Policy Agenda for Family Businesses
Summary of Recommendations L Lowering the Cost and Complexity of Doing Business
Employment Costs and Rights Government should commit to a fixed three-year cycle for reviewing policy, similar to the spending review process. Any changes outside this cycle should be limited to genuine economic emergencies and triggered through a formal process. Assess the long-term employment consequences of equalising the National Living Wage for 18-year- olds, with particular attention to whether higher rates reduce hiring of young workers and the potential to undermine long-term employment prospects.
Include a representative of family businesses on the Advisory Board of the newly created Fair Work Agency. Conduct robust Economic Impact Assessments before implementing any changes to the Employment Rights Act (ERA), ensuring that the full consequences are understood in advance. Government must ensure a lengthy and full marketing campaign is put in place to help businesses navigate ERA changes. Energy Costs Review the impact of rising energy standing charges on businesses, with specific attention to how these increases constrain family firms’ ability to invest in energy‑efficiency measures and decarbonisation.
Extend to businesses the same approach it has taken for households regarding exemption from paying the Renewables Obligation levy. Business should receive a similar benefit which the Treasury could treat as a ‘fiscal offset’ through lower inflation. The Regulatory Cost of Doing Business To introduce a climate of stronger regulatory simplification: • Design digital regulatory systems that understand family business models of ownership
•
Ensure changes to digital systems are accompanied by clear guidance, adequate notice periods and accessible support.
•
Government to simplify and harmonise Corporate
Governance thresholds and for the Wates Corporate Governance Principles to be promoted by Government to encourage responsible governance without imposing listed-company- style requirements.
•
Improve integration and data sharing across Government platforms so that information is entered once and reused wherever possible.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Flexible Skills and the New Growth and Skills Levy System Short, bitesized training options must be available to family firms – particularly those who have unspent Growth and Skills Levy funds. There must be flexibility within the system so that zero funding is sent back to the Treasury. Work-ready and Lifelong Skills Encourage curriculum bodies and universities across the UK to weave preparedness for work skills into their curricula. Apprenticeships Exempt all businesses from paying Employer National Insurance Contributions for any level 4 and above ‘artificial intelligence related’ or ‘leadership and management’ apprenticeship. Summary of Recommendations Y Younger
Generation Focus
Business Support: Help to Grow Create Help to Grow: A School for Succession , to provide more education and support to the next generation of family business leaders. An extension of the current programme could be co-funded by family businesses, unspent Growth and Skills Levy funds, and Government. Expand the Help to Grow offer to businesses with up to 499 staff, up from the current level of 249 employees, to enable more medium-sized firms to benefit.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Introduction
Our Vision: Building Britain for Generations Family businesses are the cornerstones of our communities and for too long they have been taken for granted by short-termism that exists in our public debate. Whilst fads will go in and out of fashion, family businesses offer consistency and stability in our local communities that helps build and maintain social cohesion and community prosperity. They are major contributors to the tax base that helps drive the UK economy and its public services. 2 We call for long-term thinking in Government at all levels that mirrors the long-term approach that takes place in our family businesses. Collectively, they represent more than 90% of all private businesses, employ almost 60% of the private sector workforce, generate £985 billion in GVA, and contribute more than £400 billion in taxes. 3 Family businesses are the missing piece of the jigsaw in scale-up and industrial policy frameworks, which are designed around ‘venture-backed’ or private-equity-owned growth trajectories. To realise the potential of British industry, Government must not overlook the power of family businesses. As family businesses plan over decades, not electoral cycles, it is time for a new private and family-first approach which is centred on long-term growth. It is time for politicians to understand how family businesses operate, what motivates them, and how they operate differently from public limited companies and private-equity-backed firms. Family businesses have been building Britain for generations and call for a long-term approach to policymaking to help match their ambition, to help them invest and grow and build the future generations.
We call on political thinkers to follow the ‘family’ message: F air Taxation that stimulates growth A ccess to finance and business support M edium-sized family focus – which is the overlooked engine of national productivity I nvestment in our local communities where family firms are rooted L owering the cost of doing business Y oung generational focus to empower the leaders of tomorrow
2 Sunday Times Tax list – Saturday 31st January 2026. 3 Family Business Research Foundation: 2023 edition of The State of the Nation: The UK Family Business Sector .
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Building Britain for Generations: A Policy Agenda for Family Businesses
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Building Britain for Generations: A Policy Agenda for Family Businesses
The UK Family Business Sector In Numbers
15.8 million Employed by family businesses in the UK. £2.8 trillion In turnover is generated by UK family businesses. £985 billion Gross Value Added (GVA) to UK GDP by UK family businesses. £422+ billion Is contributed by Family businesses to the UK Exchequer through tax receipts alone, which is over a quarter (26%) of the Government’s total receipts.
93% of all private firms in the UK are family businesses. That’s 5.1 million businesses.
Data from ‘Family Business Research Foundation: 2023 edition of The State of the Nation: The UK Family Business Sector.’
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Building Britain for Generations: A Policy Agenda for Family Businesses
*Data for this section was collected (Jan/Feb 2026) by Censuswide for FBUK, among a sample of 559 family business owners and senior decision makers in family businesses Key Findings from FBUK Insights
Access to Finance 88% of respondents answered that some finance would help their family business invest and grow over the next 12 months.
Next Generation 35% said access to leadership and management skills development for Next Gen family members would support the business.
Confidence in Family Ownership Three-quarters (74%) of family firms are confident that they will remain family- owned in 10 years.
Community 87% of family
Cost of Doing Business
Regulatory Burden
BPR/APR The majority (57%) of family businesses say the changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) will still have a material impact on their business, even with the change to the thresholds in December 2025.
businesses actively support their local community in at least one key area – from charitable, philanthropic or wider community initiatives, to strengthening local supply chains, protecting the environment, investing in local skills, or supporting socially or economically disadvantaged groups.
More than four in 10 (43%) said business rates is having the greatest tax impact on their business. 41% of respondents said that reducing Employer National Insurance Contributions would help their family business invest and grow. 30% said energy costs or volatility were the main barrier to growth.
Four in 10 (41%) said that better understanding of family business models by regulators would help their family business.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Fair Taxation System Every party claims growth as its priority. But growth depends on investment, and investment depends
Recommendation Create a clear Tax Roadmap to give businesses confidence about the direction of travel on tax issues. This Roadmap must include business and ownership taxes including Corporation Tax, Capital Allowances, Business Rates, Inheritance Tax and Dividend Tax. This clarity would allow firms to plan multi-year investments, succession arrangements and expansion strategies without the fear of sudden, damaging surprises.
Fig.1 below shows the three areas of taxation that respondents said would help their business grow: reducing Employer National Insurance contributions, Business Rates reform and Inheritance Tax reform. 4 VAT simplification (31%), reforming income tax rates (31%) and capital gains tax (29%) were almost equal considerations, highlighting how multi-layered tax concerns are for family firms.
on confidence. Family businesses, who plan in decades, not electoral cycles, will not commit capital when the tax rules keep changing. A fair tax environment for family firms means one thing above all: stability. That means a tax system that rewards long-term ownership, supports smooth generational transitions, and does not treat succession as a taxable event to be exploited, but as a moment of continuity to be celebrated. Stability and Forward Planning The tax and policy environment facing family businesses is not a narrow concern but a matter of national economic strategy. When Government decisions strengthen the ability of family firms to invest, expand and export, the benefits ripple through every region of the UK. Given that family businesses make up more than 90% of all UK businesses, this has far-reaching impacts across our economy. Uncertainty is itself a tax on investment. Family firms will not commit capital when the rules keep changing. Politicians need to understand how interlinked operational business taxes (paid while running the business) and ownership/transfer taxes are for family businesses and their owners.
Fig.1 Which forms of tax support, if any, would most help your family business invest and grow over the next three years? (Select up to 3)
Reducing Employer National Insurance Contributions
40.8%
Business rates reform
38.8%
Inheritance tax reform (Business Property Relief and Agricultural Property Relief)
34.0%
VAT simplification
31.3%
Reforming income tax rates
31.3%
Reforming Capital Gains Tax
29.0%
Reforming and simplifying R&D tax reliefs
24.0%
No form of tax support would help my family business invest and grow over the next three years
5.9%
Other
0.7%
0
10
20
30
40
50
4 Censuswide Survey commissioned for Family Business UK, Jan-Feb 2026
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Building Britain for Generations: A Policy Agenda for Family Businesses
Ownership Taxes Following the Government’s changes to Inheritance Tax affecting Business Property Relief (BPR) and Agricultural Property Relief (APR), family businesses feel that tax instability is undermining their ability to grow. FBUK’s Taxing Futures report shows that the behavioural impact could result in up to 208,000 full-time jobs being lost between 2026 and 2030. 5 The report showed that in the four months after the changes were announced at the Autumn Budget of 2024, 60% of family businesses expected to reduce investment by more than 20%, and 23% had already reduced headcount in anticipation of the reforms. 6
The removal of full Business Property Relief (BPR) and Agricultural Property Relief (APR) is the main area of succession relief that is impacting growth and gives a competitive advantage to PLCs and foreign-owned competitors who do not pay a 20% Inheritance Tax liability. When factoring in the Dividend Tax, this results in an effective tax rate of 33% on the value. FBUK data shows that 57% of family businesses will still be affected by the changes to BPR, even with the increase in the threshold to £2.5million announced in December 2025. 7 Furthermore, almost a quarter (23%) of family firms said that full reversal of the changes to BPR and APR would encourage them to take on staff over the next three years. Almost a half (48%) of family-run businesses with more than 500 employees said that full reversal would encourage them to take on staff. 8
Recommendations: Reintroduce full Business Property Relief and Agricultural Property Relief to support continuity in family ownership. Reinstatement of full 100% Business Property relief, with no upper thresholds, could provide a tax surplus to the Treasury by unlocking capital investment and creating, and sustaining, more jobs. In the short term, Government should commission a full independent review of the policy, assessing the behavioural impacts on family businesses. This would enable Government to understand the impact and reconsider the policy.
Three key issues: 1. Double taxation: if shareholders must extract cash to pay Inheritance Tax, that extraction is typically taxed again (e.g., Dividend Tax), meaning a second layer of tax purely to pay the first. 2. Financing costs: where families borrow personally to meet the liability, they face real and ongoing interest expenses. 3. Liquidity vs. investment: even with instalments, the business must still preserve cash and de-risk, which directly competes with capital investment, innovation investment and hiring.
5 & 6 CBI Economics report commissioned by FBUK: Taxing Futures The economic and fiscal implications of changes to BPR & APR for UK family businesses and farms June 2025 7 Inheritance tax reliefs threshold to rise to £2.5m for farmers and businesses – GOV.UK 8 Censuswide Survey commissioned for Family Business UK, Jan-Feb 2026.
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Building Britain for Generations: A Policy Agenda for Family Businesses
“Successive Governments have advocated for unequivocal Business Rates reform and ways to cut the burdens on business, however, the system is archaic and broken”
Incentivising Management to Think Long Term
Business Rates Reform Business Rates receipts are forecast by the Office for Budget Responsibility (OBR) to grow by nearly 10%, reaching around £37 billion in 2026–27 and rising further thereafter. As the system is designed to be revenue neutral, there will inevitably be winners and losers, as the Government relies on this fixed revenue stream to balance the public finances. FBUK data shows that 43% of family-owned businesses say Business Rates are having the greatest impact on their operations. FBUK Members report that their biggest challenge is the lack of transparency and consistency within the Business Rates system. Businesses want to understand what their future liabilities will be and why they are charged the amounts they are. Many feel there is limited comparability and an element of unfairness, with some paying more and others less for properties on similar estates. Clear, accessible explanations for these differences are often missing. Successive Governments have advocated for unequivocal Business Rates reform and ways to cut the burdens on business, however, the system is archaic and broken. No other tax guarantees a predetermined level of income to the Treasury in this way.
Enterprise Management Incentives (EMI) or Company Share Option Plan (CSOP) schemes provide employee retention opportunities in entrepreneurial ‘owner managed’ businesses and private equity businesses with a potential future exit. However, family businesses cannot utilise these, as they do not plan to exit, they plan for succession. Listed businesses can utilise approved schemes such as Save As You Earn and Share Incentive Plans to similarly attract, retain and align employees to the growth of the business. The increase in EMI/CSOP limits is generally viewed as a positive development. However, family business owners are looking for a simpler set of eligibility criteria and rules for EMI and similar schemes.
Recommendations Move to a progressive approach for calculating Business Rates. Under a new system, each portion of the rates bill would be charged at the rate applicable to that specific band, rather than applying a single percentage to the entire amount. This is how Income Tax and Stamp Duty Land Tax work, enabling revenue and fairness to be achieved together. In the long term, the Business Rates system needs a fundamental overhaul to make it genuinely fair for family‑run, bricks-and-mortar businesses who act as the long‑term custodians of our high streets.
Recommendation Introduce a similar scheme to EMI/ CSOP for family businesses – which allows efficient and simple equity incentivisation. This could be done by amending EMI rules to allow exit via share buy-backs. An ‘ownership focused’ equity scheme incentive for family businesses would be the primary focus.
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Building Britain for Generations: A Policy Agenda for Family Businesses
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Building Britain for Generations: A Policy Agenda for Family Businesses
Accessing Finance and Business Support Family businesses grow differently. Without access to equity markets or venture capital, they rely on retained profits, bank debt, Better Understanding of the Family Business Financial Ecosystem
Larger family firms said they were more likely to utilise retained profits, equity investment and patient capital than smaller firms, which were more likely to use Government-backed loans or traditional bank loans, or not utilise any form of finance over the next 12 months. However, family firms need support with attracting the right form of finance at the right time of their business journey.
Fig.2. below shows that family firms are keen to use a variety of financial products to achieve their growth potential.
and patient capital, and they are disciplined about it, because they are spending their own money and the next generation’s inheritance. That makes them attractive to lenders, but it also leaves them underserved: the financial products designed around exit-driven growth trajectories simply do not fit firms that plan to stay. Closing that gap, between what family businesses need and what the market currently offers, is what this section addresses. We need to foster a financial and business environment that recognises family businesses as both a reliable long‑term investment and an appealing opportunity for alternative forms of finance, enabling support for the most innovative and fastest-growing privately owned and family businesses. FBUK research showed that more than eight in 10 (83%) family businesses accessed at least one source of finance over the past 12 months. However, of those that did access finance, only 47% said it was ‘easy’ to access it. Just over two in 10 (22%) micro family firms said it was ‘easy’, with 59% of large firms saying it was ‘easy’. 9
Fig.2 Looking ahead over the next 12 months, what types of finance, if any, would most help your family business to grow?
Retained profits / self-financing
30.6%
Grants / public funding
29.3%
Equity investment that allows family control to be retained
29.0%
Traditional bank lending
28.8%
Government-backed loan schemes / guarantees
25.4%
Long-term / patient capital
22.0%
Asset-based finance (e.g. leasing, invoice finance)
20.4%
Private debt / alternative lenders
15.8%
No form of finance would help my family business invest and grow over the 12 months Other
11.8%
0.5%
0
5
10
15
20
25
30
35
9 Censuswide Survey commissioned for Family Business UK, Jan-Feb 2026
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Building Britain for Generations: A Policy Agenda for Family Businesses
“The financial landscape must target the right funding at family businesses to help them to invest in innovation and productivity”
With the three key financial institutions (Business Growth Fund (BGF), National Wealth Fund (NWF) and British Business Bank (BBB)) each offering distinct forms of capital, it is vital to boost awareness of what they provide and how they can better serve the specific needs of privately owned and family businesses. Greater visibility and clearer targeting would unlock far more of the support these firms deserve. The new Private Intermittent Securities and Capital Exchange System (PISCES) creates a regulated way for private companies to trade existing shares, and FBUK believes greater awareness and understanding of this platform could open valuable opportunities for family businesses to support their long-term growth and operations. Misaligned financial products lead to a capital gap for family firms. The financial landscape must target the right funding at family businesses to help them to invest in innovation and productivity, expand regionally or internationally, navigate generational transitions and contribute to the UK’s industrial and clean‑energy priorities.
Recommendations HM Treasury and the Department for Business and Trade should develop dedicated financial products for family firms and create a clear, easy to navigate ‘Family Business Products’ section within the Business Growth Service. This should give family businesses straightforward access to capital at every stage of growth, including clear information on the Business Growth Fund, National Wealth Fund, British Business Bank and PISCES. Use the Government’s convening power of growth funding to ensure banks and lenders understand family governance models and expand growth capital funds which are tailored to non-venture backed ‘asset-rich-cash-poor’ family businesses.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Start, Scale and Stay Previous Governments have focused heavily on tax incentives for start- ups, and entrepreneurs who plan to scale quickly and sell their businesses. This means the needs of long-term, sustainable scale-ups have been overlooked. We need a tax environment which makes the UK the best place for founders to start, scale and stay with their businesses. This includes incentivising and supporting founders and multi-generational business owners. Family businesses are the missing piece of the jigsaw in scale-up and industrial policy frameworks, which are designed around ‘venture- backed’ or private-equity-owned growth trajectories. Recommendations Provide better incentives for family offices to invest patient capital in other businesses looking to scale up. This will recycle capital from one set of successful family businesses into the next, enabling diversification and harnessing scale-up potential. This could also include exploring Enterprise Incentive Scheme style incentives and encouraging Corporate Venture Capital participation.
Export Finance and Business Support Access to finance remains one of the most persistent barriers to SME exporting. Although UK Export
The current tax system provides a tax incentive to exit a business, as there is an effective tax rate of 24% on gains versus an effective 54% on generating profits and taking a dividend. This additional 30% tax rate on retaining a company for the long term and extracting value by dividends rather than exiting does not support long- term holding of UK companies, but incentivises exits, often to overseas investors. Providing entrepreneurs with allowances if they invest in long-term businesses, which are epitomised by family-owned firms, would create a culture for longer-term investments built on patient capital.
FBUK believes there is a strong case for closer collaboration between Government, UK Export Finance, and business organisations such as FBUK to ensure that family- owned firms can access the export finance and advice they need. This should include tailored outreach and advisory services, flexible credit guarantees for first time exporters, and small-scale grants or support mechanisms to cover practical needs such as translation, international marketing, and supply chain integration.
Finance supported more than £575 million in SME exports last year 10 , only a small fraction of exporting SMEs currently use these services. Many still rely on overdrafts or loans rather than dedicated trade finance.
Recommendation Create an Export Support and Finance ‘task and finish’ group to address the unique barriers family firms face. Convened by FBUK, DBT and UKEF this would help more family firms take their first, or next, steps into international trade.
Allow rollover relief for investing in private trading companies. If someone sells an asset and reinvests the money into buying shares in a UK private trading business, they should be able to rollover paying Capital Gains Tax like the current EIS system, but without limits on the size of the company.
10 Initial Scale-Up Institute Date (2025), commissioned by FBUK, to be published Q1 2026
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Building Britain for Generations: A Policy Agenda for Family Businesses
Targeted Mentoring FBUK welcomes the recent launch of the National Mentoring Business Council. Recent surveys show that eight in 10 SMEs believe mentoring services can lead to further business growth 11 The Council’s focus is aimed at supporting underserved communities and regions. However, it is important that family businesses, which have their own distinct cultures, values and relationship dynamics, are served through a national mentoring system. These firms are deep rooted in their communities and their unique family ties shape how they grow and make decisions. Expanding the family business specialist mentoring capacity will be critical to supporting multigenerational family firms. These mentors will be best placed to understand the differences of family business ownership rather than treat them as just another segment of the overall business landscape.
“It is important that family businesses, who have their own distinct cultures, values and relationship dynamics, are served through a national mentoring system”
Recommendation Expand mentoring capacity for
family‑owned firms by recruiting and training more mentors with direct family‑business experience into mentoring bodies such as MentorsMe.
11 New National Business Mentoring Council Launches to Support Growth Of UK Businesses | Talk Business
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Building Britain for Generations: A Policy Agenda for Family Businesses
Mid-Sized Family Business Focus
Similar to the German ‘Mittelstand’, the UK’s mid- sized sector businesses hold huge potential and need to be harnessed to build a stronger economy at both a national and regional level. The scaling opportunity for these firms has, for too long, been neglected. Corporate governance requirements for these businesses, difficulties accessing finance and business support, and opportunities to take up procurement opportunities are cited as key barriers to growth. Scale-up Institute data shows that almost six in 10 (55%) mid-market family businesses feel there is very little support available for businesses like theirs. 14
Britain has a missing middle. The 10,000 mid-sized family firms that generate more than £140 billion in economic output and employ nearly 1.5 million people are largely invisible to policymakers. These are not lifestyle businesses. They are established, regionally rooted enterprises with the capacity to scale, and they are being held back by a policy environment designed for someone else. The barriers are specific: corporate governance requirements calibrated for listed companies, financing products designed around exit rather than growth, and procurement processes that favour large multinationals over capable local firms. Generic SME policy doesn’t reach them. Scale-up policy fits some, but not all of them. This section sets out what a targeted approach would look like to grow Britain’s ‘missing middle’ of strong family businesses, and with it the productivity of the whole nation. A Scale-up Institute report 12 , commissioned by FBUK, has homed in on mid-market and scaling family businesses population reflecting that there are nearly 10,000 of such firms across the country: 8,641 mid-market family businesses; alongside 2,985 scaling family firms (1,771 are in both segments). Within these businesses 13 , the mid-market firms generate more than £140 billion to the UK economy and employ more than 900,000 people; while family scaling businesses generate £72 billion and employ half a million individuals.
Recommendations Adopt a shared definition of medium-sized companies across all Government departments, to enable consistency of approach and focus. This should be those with revenues between £10 million and £100 million and 50 to 499 employees. Adopt a targeted strategy to support the growth and
resilience of medium-sized firms. This should include a dedicated concierge/ account management service as the central access point for medium‑sized firms, providing streamlined guidance across
support programmes, investment routes, and regulatory processes.
12,14 Forthcoming Scale-Up Institute Date (2025), commissioned by FBUK, expected publication Q2 2026. 13 Scale-Up definition of scaling mid-market – those with revenues between £10 million and £100 million and 50 to 499 employees and cover those growing their turnover or employee headcount, or both, by 20% or more each year over a monitoring period of three years; or a rate of between 10-20% with the same core parameters.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Export Finance for Mid-Sized Firms The £11 billion trade finance package for SMEs 15 , alongside the British Business Bank’s £6.6 billion growth and capital support 16 , introduced as part of the Government’s Industrial Strategy, along with UK Export Finance, must set achievable finance targets to support scalable family-owned businesses. Mid-sized family firms have the potential to scale rapidly. It is essential that the Treasury monitors the impact of these funds and ensures that international trade support remains a key driver of growth for this cohort.
Recommendations UK Research and Innovation should implement the recommendations of Deepening University-Investor Links in a way that broadens university–business collaboration beyond spinouts and venture-backed firms. In particular, this should include: • Recognising long-term private capital, including established and family-owned firms, as strategic innovation partners.
Recommendation Assess the utilisation and impact of export funds, twice yearly, to ensure that support for international trade continues to deliver measurable growth outcomes for private and family-owned businesses.
The UK’s productivity challenge will not be solved by start-ups alone. Established mid-sized and family-owned firms, many embedded in regional supply chains, have significant capacity to absorb innovation, invest patiently, and partner with universities over the long term. Yet the current system of incentives, metrics and funding streams does not consistently prioritise sustained collaboration with this wider business base. Tony Hickson’s review for UKRI 17 , Deepening University–Investor Links , set out practical steps to strengthen collaboration between universities and long-term sources of capital, improve knowledge exchange incentives, and build deeper institutional partnerships. Implementing the core findings of the Hickson Review in a way that reflects the full structure of the UK economy would strengthen innovation diffusion and regional growth.
•
Aligning UKRI funding and knowledge exchange metrics to reward sustained, place- based collaboration, not only equity commercialisation, currently excluded due to ownership structures. Removing structural barriers that discourage privately held mid-sized firms from engaging in publicly funded R&D programmes.
University Collaboration with Mid-Sized Family Firms
Universities, just like family businesses, are integral parts of their local communities. The 170 UK universities help build Britain’s talent for generations. Innovation policy, however, remains disproportionately focused on venture-capital- backed start-ups and equity-based spinouts. While these firms are important, they represent only a small part of the UK economy.
•
15 UK lenders step up with £11 billion push to back British businesses – GOV.UK 16 Press release – 23 June, 2025 | British Business Bank. 17 Deepening University-investor links a review by Tony Hickson, February 2026 https://www.ukri.org/publications/deepening-university-investor-links/
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Building Britain for Generations: A Policy Agenda for Family Businesses
Investing in our Communities
Local Procurement Family businesses consistently report that public procurement processes are overly complex, resource intensive and unintentionally biased towards large, multinational suppliers. While transparency and value for money are essential, the cumulative administrative burden acts as a barrier to entry for many capable family firms. Preparing bids often requires significant time,
legal input and repeated submission of the same information across multiple portals. For family businesses without dedicated bid teams, the cost of participation can outweigh potential returns, discouraging engagement. As a result, many family businesses are deterred from bidding altogether, despite often being well placed to deliver high quality, value for money services rooted in local communities.
Family firms are uniquely placed to invest in their local communities because they are rooted in their local areas for the long term. This long-term investment has helped build Britain’s communities for generations. It is with that in mind that we recognise the civic role of family businesses to our high streets and our social fabric – and how we must champion and support them. Fig.3 shows that 87% of family businesses actively support their local community in at least one key area: from charitable, philanthropic or wider community initiatives, to strengthening local supply chains, protecting the environment, investing in local skills, or supporting socially or economically disadvantaged groups.
Fig.3 Thinking about your local community, which of the following roles, if any, does your family business currently play?
40.6%
Providing stable, long-term employment
31.5%
Creating and sustaining local jobs
Recommendations Simplify the procurement system to
31.5%
Supporting community organisations or initiatives
place greater weight on social value, local presence and long-term delivery capability in Government and local Government tenders. The new Office for the Impact Economy 18 should work closely with Department for Business and Trade and the wider Cabinet Office to make these changes. Introduce proportionate financial and insurance thresholds aligned with contract risk, and improve transparency and feedback mechanisms to support continuous improvement by family business bidders.
31.0%
Supporting local supply chains
27.4%
Supporting the local green transition
23.8%
Supporting local charities or philanthropic causes
23.1%
Investing in local skills or training
7.0%
Supporting socially or economically disadvantaged groups
3.4%
None of the above
0.5%
Not sure
0
5
15
20
25
30
35
40
10
18 Office for the Impact Economy – provides a single front door for impact investors, philanthropy and purpose-driven businesses to partner with the Government and grow their social impact across the UK
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Building Britain for Generations: A Policy Agenda for Family Businesses
High Streets Family businesses don’t just trade on high streets, they anchor them. Unlike national chains, they can’t relocate to a distribution warehouse or retreat entirely online. They are structurally committed to place in a way that no corporate retail strategy can replicate, and their presence over decades, across generations, can be what gives high streets their character and resilience. That commitment deserves recognition in the tax system. We recommend that Government introduces a Community Investment Tax Relief for businesses, similar to the Gift Aid and Community Amateur Sports Club relief available to individual donors, allowing family firms to offset investment in community assets, local infrastructure, or crime reduction measures against their tax liability. This would formalise and reward what many family businesses already do instinctively, and direct private capital towards community needs without additional public spending.
Further Devolution Family businesses are inherently local. They don’t actively look to move their headquarters or consolidate regional operations into a national hub. Their success is tied to the places they are in, which makes them a crucial part of devolved Government. Yet family businesses remain an afterthought in most mayoral and combined authority structures. The models exist: Deputy Mayors for Business, sectoral Advisory Councils, dedicated Czars for the night-time economy. What is missing is
equivalent representation for the businesses that form the backbone of every regional economy. We call on all Mayors and devolved leaders to ensure family businesses have a formal voice in their economic governance as a recognition of where regional growth comes from.
Recommendation Implement a new wave of fiscal devolution led by new and existing Mayors. All Mayors should have family business representation on their Business Advisory Council or appoint a ‘Family Business Czar’.
Recommendation Introduce tax relief for family businesses which invest in their communities – for instance if they invest in community spaces or measures to reduce the level of business-related crime. This could be similar to the current tax relief system where individuals can donate to Charities or Community Amateur Sports Clubs.
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Building Britain for Generations: A Policy Agenda for Family Businesses
Lowering the Cost of Doing Business
The issue for family firms is not only the level of employment costs, but also the rhythm of changes. Annual changes make genuine long-term planning impossible; firms cannot commit to hiring, capital investment or apprenticeships when the employment cost base shifts every 12 months. A predictable, multi-year cycle would not reduce the cost of employment, but it would allow family businesses to absorb those costs within a coherent investment plan rather than reacting to them year by year.
Family firms are typically long-term employers, deeply embedded in their communities and committed to doing the right thing. However, they often lack the scale, specialist staff and legal capacity to absorb growing compliance demands. As a result, they are disproportionately affected by regulatory complexity, even where the underlying policy intent is well intentioned. Policy instability across Inheritance Tax, National Insurance, and employment rights is freezing long- term decision making and succession planning. This directly reduces capital investment and risks making businesses less competitive. Barriers to Growth The rises in Employer National Insurance and the National Living Wage have landed at the worst possible moment for family businesses already navigating high inflation and squeezed margins. 43% percent cite ‘high inflation and cost pressures’ as their primary barrier to growth followed by 33% stating that employment costs were the main barrier.
Recommendations Government should commit to a fixed three-year cycle for reviewing policy, similar to the spending review process. Any changes outside this cycle should be limited to genuine economic emergencies and triggered through a formal process. Assess the long-term employment consequences of equalising the National Living Wage for 18-year-olds, with particular attention to whether higher rates reduce hiring of young workers and the potential to undermine long-term employment prospects.
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