£29 Billion - the cost of scrapping BPR
Martin Greig Chief Advocacy Officer (maternity cover) FBUK
Reverse the Changes
At the heart of our Back Family Businesses campaign is a simple message: policies that support family businesses are good for the economy and removing them would be counterproductive. But is it possible to put a cost on removing them? The short answer is yes, and it is a lot! Knowing the Government might remove Business Property Relief (BPR) and Gift Holdover Relief (GHR) in the Budget, FBUK commissioned CBI Economics to assess the impact of doing so. The results make for sobering reading. Removing both BPR and GHR would re- duce economy activity by £29.3 billion over the next five years and lead to 391,000 job losses. Almost of half (48%) of family-owned businesses would reduce investment, (33% saying “significantly”), 30% would reduce headcount and almost one quarter would expect to see lower revenues as a result. An estimated 347,243 businesses would be forced to close – 83,850 of which being businesses that employ people. The effects would be felt across the economy but with sectors such as construction; manufacturing; logistics and retail particularly hard hit. And the money raised by government by removing the reliefs? Nothing! Actually, less than nothing. Over the course of this Parliament, removing BPR and GHR would produce a net fiscal loss to the Exchequer of almost £1 billion. When the Chancellor unveiled the Budget on 30 October it was presented as a set of measures to drive growth and investment. As it turned out, the changes to Inheritance Tax (IHT) reliefs announced in the Budget are not as simple as just removing them. But, for the vast majority of family businesses, the net effect is likely to be similar.
BPR and GHR sit at the heart of the family business model. But they are so much more than financial measures. They are tools that sustain the values of hard work, responsibility, and opportunity - values that sit at the heart of the British way of life. Changing IHT reliefs in the way the Government has done undermines the fabric of our society. Well run businesses that patiently invest in people and communities up and down the country will be sold or managed for tax purposes and extracting maximum return on assets. For many UK family businesses who compete with international companies, the changes are simply too much. In addition to hikes in employer’s National Insurance, employment legislation, minimum wages and business rates they are yet another way in which they are disadvantaged. We believe the Government has got these changes wrong. Our Back Family Businesses campaign is now a call to reverse them, and at the very least offer a consultation on the proposed changes. For a government elected on a pro-growth agenda, and that claims to be listening to the voice of business, open and constructive dialogue is vital if business confidence in the new Government is to be restored. These are the messages and financial data we are taking to Ministers. You can help us by sharing your views and stories and lobbying your local MP. You can find details on our campaign webpage .
by the numbers...
£29billion loss to the economy (-£29bn GVA = Gross Value Added) 391,000 jobs lost £1billion net loss to the Exchequer ie, by scrapping it the Gvt could raise £7.4bn over 5 yrs but that would cost £8.4bn over the same time scale 48% of family business would reduce investment 30% reduce headcount 24% expect lower revenues 16% would have to sell-up to pay an Inheritence Tax Bill 347,000 micro businesses would be forced to close
14
Made with FlippingBook - professional solution for displaying marketing and sales documents online