Month: November 2025

Budget 2025 analysis

Posted on by Martin Greig

Budget 2025 delivered a mixed picture for family businesses. While some of the most worrying proposals that had been trailed in recent weeks did not appear, this remains a Budget that raises significant revenue, leaving the UK with the highest overall tax take since the second world war.

The Chancellor spoke of wanting the UK to be “the best place to start up, scale up and stay” and said that “growth begins with the spark of an entrepreneur”. She promised that “if you build here, Britain will back you”.

These are welcome words but the measures announced today don’t fully match that ambition for family businesses.

Snapshot

  • No major shocks: Many feared tax hikes did not materialise.
  • Still a revenue-raising Budget: Freezing personal tax allowances and thresholds means more income will be drawn into higher tax bands over time. Dividend and property tax changes will also increase the overall burden.

Notable announcements

Inheritance Tax

  • The Government announced that unused allowance for agricultural and business property reliefs will be transferable between spouses and civil partners.  
  • This brings BPR/APR allowances in line with normal IHT allowances that everyone gets.
  • For some, their effective allowance will now be £2 million not £1 million.
  • Indexation: the Government has delayed the indexing of the £1 million allowance to the Consumer Price Index (CPI) to 2031, one-year later than stated in the Finance Bill. Indexation of the reliefs has been an important ask we have put to government so, further delay is disappointing and will have the effect of pulling more and more businesses above the threshold at which full relief from IHT is removed.

Despite speculation in the press, there have been no changes to IHT gifting rules or CGT uplift on death.

However, in the detail of the Budget (in what’s known as The Red Book) there is commentary about anti-avoidance measures around IHT:

The Government will legislate to prevent Inheritance Tax avoidance through certain loopholes, including ensuring UK agricultural property held via non-UK entities is treated as UK-situated addressing Budget 2025 changes in status of trust assets before and exit charge, and restricting charity exemptions to direct gifts to UK charities and clubs.

We will be following up with HM Treasury and HMRC to get more details on the specifics around these announcements.

Commenting on the changes announced to the rules on spousal transfers, FBUK CEO Neil Davy said:

The Chancellor’s announcement allowing family business owners to transfer their £1m allowance between spouses is a welcome step and one of the proposals we asked the Government to consider.

But it represents a minor tweak to a policy that is doing enormous damage to private and family owned businesses and farms.

The changes to BPR and APR have led business owners to cut investment and stop hiring. Regardless of today’s concession, family businesses and farms are subject to a tax that no other model of business ownership has to pay.

The announcement is recognition that the Government got this policy wrong last year. Minor tweaks do not make it right.  The right thing for government is to pause this policy and work with us to find a better solution than this damaging tax.

Other key announcements

  • National Insurance and income tax thresholds will be frozen for an extra three years until April 2031.
  • Cap for pension salary sacrifice schemes from 2029 – with contributions above £2,000 subject to tax in the same way as other employee pension contributions.
  • Cap of £12,000 a year for Cash Isas from April 2027 for the under-65s. Remaining at £20,000 for over-65s.
  • Two-child benefit cap scrapped from April 2026.
  • Properties worth more than £2m charged £2,500 annually and properties worth more than £5m charged £7,500.
  • Pay per mile charge for electric vehicles – 3p per mile for electric cars and 1.5p for plug-in hybrids.
  • Fuel Duty Frozen until August 2026 and then gradual increases

On the changes to salary sacrifice, FBUK Chief Operating Officer Fiona Graham said:

Capping salary sacrifice on employee pensions at £2,000 will make it more costly for business to maintain competitive workplace schemes. For employers running salary sacrifice arrangements there will be potential additional costs in supporting their employees to save for retirement.

UK economic context at a glance

  • The government forecasts UK GDP growth of 1.5% in 2025, up from 1.0% at the time of the previous spring forecast.
  • The independent forecaster Office for Budget Responsibility (OBR) has lowered its medium-term productivity outlook by 0.3% to 1.0% by the end of the five-year period.
  • The OBR has downgraded its forecast for business investment, with growth in investment averaging 0.75% a year between 2026-2030
  • The government is on track to meet its fiscal rules: borrowing is forecast to fall, and public-sector debt (as a share of GDP) is set to decline by 2029–30.
  • The government will ‘more than double’ the fiscal headroom against its stability rule to £21.7bn.  

Employment announcements

  • Increasing the National Minimum Wage rate (from £10 to £10.86 per hour and the National Living Wage (from £12.21 to £12.71)
  • Training for under-25s on apprenticeships will be made free for small and medium-sized enterprises.

On minimum wage and apprenticeships, Fiona Graham said:

Training for under 25s on apprenticeships will be made free for small and medium-sized enterprises. With nearly a million young people still out of work or training, boosting access to apprenticeships is a helpful step. However, recent above-inflation minimum wage rises have pushed up costs for SMEs which will blunt the impact of the Government’ office and make it harder to take on young talent.

In light of the changes to IHT, family businesses will still be having to put aside money to cover a large IHT bill. This will continue to have a knock-on affect on their ability and appetite to create jobs, including opportunities for young people.

Business announcements

  • Reforms to Customs Duty relief for low-value imports: relief for goods under £135 is being removed – a change that will affect importers, particularly online retailers relying on low-cost imports.
  • Stamp Duty holiday for newly listed companies – three-year exemption on newly issued shares.
  • Permanent reduction for many business-rate bills in retail, hospitality and leisure.
  • Business Rates – the government is introducing a higher rate for those with rateable values of £500,000 and above, but many businesses will now see a significant increase in their rates – particularly in retail and hospitality where Covid-era support is now phasing out.
  • Higher Dividend Tax – up by 2% for the basic rate (8.75% to 10.75%) and the higher rate (33.75% to 35.75%). The additional rate remains unchanged.
  • Enterprise Management Incentive – increasing the company eligibility limits for the Enterprise Management Incentives scheme (EMI) to allow scale-ups to join start-ups in offering tax-advantaged shares.
  • Lower Writing Down Allowance for business investments from 18% to 14% – meaning businesses can’t deduct as much of their investment costs from profits as before. However, as most businesses would claim full expensing this is unlikely to have a material impact.
  • Writing Down Allowance (1st year) – from 1st Jan 2026 the government will introduce a new first-year allowance of 40% for main‑rate assets.  Cars, second-hand assets and assets for leasing overseas will not be eligible.
  • Employee Ownership Trusts – The government will reduce the relief available on these disposals from 100% of the gain to 50%.

FBUK welcomes positive step on day-one rights

Posted on by Martin Greig

FBUK has welcomed a decision by the Government to drop plans giving protection from unfair dismissal to new workers from their first day in a job.

The plan, which was a key election manifesto pledge, and a central feature of the Government’s Employment Rights Bill, will instead see the Government introduce protection for workers after six months in a job.

FBUK, along with other business organisations, has called on the Government to drop the commitment to day-one rights on unfair dismissal arguing it would deter businesses from hiring. Other day-one rights including statutory sick pay and paternity leave will go ahead as planned from April 2026

Fiona Graham, Chief Operating Officer said:

We welcome the Government’s decision to move away from day-one rights for unfair dismissal and introduce a six-month probationary period.

This is a positive step that gives businesses the flexibility they need to recruit and retain the right people. For family businesses, where culture and trust are critical to success, a fair probationary period helps ensure the right fit.

However, this change also signals the need for a fundamental review of the Employment Rights Bill to make sure it truly supports businesses and their ambition to invest and grow, while helping the Government deliver its number one priority: growth.

Chancellor announces minor concession to APR and BPR

Posted on by Abbie-Louise

Chancellor of the Exchequer Rachel Reeves has today announced a small concession for family businesses regarding proposed reforms to inheritance tax relief. 

Under proposals first announced at the 2024 Budget, the Government will reform Agricultural Property Relief (APR) and Business Property Relief (BPR), so that full 100% relief will be limited to a £1 million.  

During today’s Budget, Ms Reeves confirmed that family business owners would be able to transfer their £1 million allowance between spouses, raising the allowance to £2 million for some. 

Family Business UK will continue to press government for a more meaningful change to the policy. 

Responding to the announcement in today’s Budget, Neil Davy, Chief Executive Officer at Family Business UK said: 

“The Chancellor’s announcement allowing family business owners to transfer their £1 million allowance between spouses is a welcome step and one of the proposals we asked the Government to consider. 

“But it represents a minor tweak to a policy that is doing enormous damage to private and family-owned businesses and farms. 

“The changes to BPR and APR have led business owners to cut investment and stop hiring. Regardless of today’s concession, family businesses and farms are subject to a tax that no other model of business ownership has to pay. 

“Today’s announcement is recognition that the Government got this policy wrong last year. Minor tweaks do not make it right. 

“The right thing for government is to pause this policy and work with us to find a better solution than this damaging tax.”  

 

Family Business Week 2025 is live

Posted on by Abbie-Louise

Family Business Week, which celebrates the contribution family businesses make to the economy and communities across the UK starts today, Monday November 24.

The event, which is now in its fifth year, shines a light on the millions of amazing family businesses right across the country.

From small, first generation firms to 350-year-old, 15th generation companies, Family Business Week is about telling their stories – stories about the businesses, the people and the communities they support.

Family Business UK (FBUK) Chief Executive Neil Davy said: “Family Businesses have been building Britain for generations. They are the rock on which our economy and local communities thrive.

“All of us interact with family businesses every day, often without knowing it. They are the brands that fill our shopping baskets, they build our homes, sell us cars, own ports and airports, they transport goods, look after us on holiday, brew our favourite tipples and serve it with a smile.

“Family Business Week is the chance for everyone to celebrate all this in a week of events and the sharing of their stories.”

Family Business Week is proudly sponsored by NatWest and supported by S&W, Julius Baer and PwC.

NatWest Business Commercial Mid-Market Managing Director Andy Gray said: “Family businesses are the backbone of our economy and are at the heart of local communities across the UK. They make up 90% of the UK’s total private sector firms, employ 16 million people and contribute £985bn in GVA to the UK economy.

“As the country’s biggest bank for business, at NatWest we understand the importance of supporting family businesses to grow, innovate and build for the future. We’re proud to be supporting Family Business Week for the fifth year in a row and we’re looking forward to celebrating the sector through our continued partnership with FBUK.”

Julius Baer International Head of UK Regions Jonathan Dobbin said: “The most enduring family businesses are those that stay true to their core values and purpose while boldly embracing change and fostering an entrepreneurial spirit to thrive for generations to come.”

S&W Partner Laura Hayward said: “S&W are delighted to sponsor Family Business Week, a great initiative to celebrate the incredible contribution of Britain’s family businesses driving innovation, creating jobs, and building legacies that last generations.

PwC Partner Dan Packwood said: “Family businesses are the backbone of the UK economy, driving growth, creating jobs and sustaining communities. Their long-term outlook and strong values make them uniquely resilient in times of change.”

This year’s event not only showcases amazing family businesses but also highlights their ambition and resilience as they look beyond UK borders.

Under the theme Global Legacies: Expanding Horizons for UK Family Businesses, it will focus on how family businesses can compete and grow on the global stage.

Almost 280,000 UK businesses currently export goods or services to more than 200 countries, contributing £838 billion to the economy.

Yet this represents just 11.5% of UK firms, highlighting enormous untapped potential for growth.

Throughout the week Family Business UK will run case studies, events and workshops to help businesses to take their first steps into international markets while supporting those who already have.

On Wednesday, FBUK will host a reception in Westminster which will bring together family business leaders, politicians, policymakers and voices from the wider family business community.

The event is set to be one of the highlights of the week and will provide an opportunity to connect, share experiences and recognise the vital role family firms play in the UK’s economy and society.

Neil Davy continues: “British family businesses are powering our economy both at home and overseas. Many are already exporting or trading internationally –  from household names to thousands of small and mid-sized businesses – they are successfully reaching millions of customers overseas with the essence of their unique family values.

“With the right policy environment behind them, they have the potential to further drive UK economic growth on the global stage. Family Business Week is about showing that by backing the rich diversity of family-owned firms across the country, they can help unlock new avenues for growth.”

FBUK calls for action on family business tax

Posted on by Martin Greig

Chancellor urged to reverse or pause damaging BPR reforms

FBUK says Autumn Budget ideal time to rethink

Warns against further business-focused tax rises

New data from FBUK shows 65% of family firms say higher costs including employment and energy are barrier to investment and growth below

Press Release

Family Business UK is urging the Treasury to use next week’s Budget to pause or reverse planned changes to inheritance tax, announced in last year’s Budget, and consult on workable alternatives to power growth.

The organisation, which represents family businesses employing almost half a million people, says that by persisting with the proposed changes to Business Property Relief (‘BPR’) and Agricultural Property Relief (‘APR’), the Government is pursuing a policy that harms jobs, weakens growth and could lower tax revenues.

Independent research commissioned by FBUK, and published this year, shows that the changes to BPR and APR could see more than 208,000 job losses by the end of this Parliament, cut economic activity by almost £15 billion and result in a net fiscal loss of £1.9 billion.

In addition, new research commissioned by FBUK, and due to be published next year, shows that while most family firms aim to grow in 2026 almost two thirds (65%) say higher costs of employment and raw materials costs are acting as a barrier to growth. More than half of family businesses (57%) are also held back by the on-going impact of high energy prices.

Against this backdrop FBUK says it would be untenable for government to contemplate further business-targeted tax increases in next week’s Budget. Instead, it is urging government to focus on big revenue raisers like National Insurance and Income Tax rather than opting for a smorgasbord of small changes which have the potential to do lasting economic damage.

Fiona Graham, COO Family Business UK, said:

“From the beginning, this Government has promised that economic growth is its number one mission. There isn’t a single business in the country that wouldn’t support that. But if the changes to BPR and APR go ahead unchanged, then family business owners and the tens of millions of people they employ will feel let down.

“All business needs a supportive policy landscape to have the confidence to invest for the future. Higher employment and energy costs are clearly acting as a drag on growth. Family businesses face the additional challenge of Inheritance Tax. No other model of business has been singled out in this way and it has, unsurprisingly, sapped their confidence to make the long-term investments their business and this country needs.

“We have spent the last year asking government to pause this policy change and consult on workable alternatives that support growth and the model of family ownership. There is still time, and this Budget offers the perfect opportunity to announce a rethink.”

Gary Dawson, Chairman AV Dawson Group, an 80 year-old family business which owns and operates the Port of Middlesbrough, located within Teesside Freeport the UK’s largest freeport, said:

“Family businesses like ours play a vital role in driving investment and creating much-needed skilled jobs in Teesside. We reinvest all profits locally, support apprenticeships and help sustain the wider supply chain that underpins our regional economy. The proposed changes to inheritance tax reliefs risk undermining that stability and confidence at a time when businesses are already facing significant cost pressures.”

“These reliefs are not loopholes, they are essential tools that allow us to continue investing in people and infrastructure and plan for succession. We need policies that encourage investment, continuity and long-term thinking, not measures that make it harder to plan for the future. Pausing these reforms would be a welcome signal that the Government understands the realities facing family firms up and down the country as well as their importance in delivering growth.”

FBUK is publishing its Budget submission ahead of Family Business Week, which starts on Monday (24 Nov), to celebrate the contribution family businesses make to the economy and communities up and down the country.

During the week, FBUK will also be running campaigns and workshops to support family firms to take their first steps to trading internationally. Across the UK, almost 280,000 businesses export goods or services to more than 200 countries in trade worth £838 Billion. But this means that just 11.5% of UK firms are exporting, offering enormous potential for growth.

Fiona Graham, COO of Family Business UK, says:

“Family businesses are the rock on which our economy, and communities thrive. Given a supportive policy environment, they can also power UK economic growth on an international stage.

“Thousands of family businesses already trade internationally including large firms like Walker’s Shortbread. But small and mid-sized family firms are also successfully exporting including Gerald McDonald Group, Healeys Cyder and Viridian Nutrition.

“Family Business Week is about demonstrating to government that by working with the rich diversity of family-owned businesses right across this country, they can be the key to unlocking growth.

“Family businesses are unique in their long-term approach to investment and growth. They have been building Britain for generations and it’s a privilege to celebrate their achievements and successes during Family Business Week.”