Ahead of the Autumn Budget in November, the Institute for Fiscal Studies has published its Green Budget which looks at the challenges faced by the Chancellor and suggests areas for consideration.
Responding to the Green Budget, Fiona Graham, Chief Operating Officer at FBUK, said:
The IFS has suggested, along with many others, that taxes will have to rise. We welcome their suggestion that any changes to tax policy should improve the design of the tax system, not worsen it.
The IFS is also right to say that many of the tax-raising options open to the Chancellor, outside the ‘big three’ of income tax, national insurance and VAT, would have particularly damaging effects on growth and welfare, so we urge the Government to carefully consider the unintended economic consequences of seemingly minor policy tweaks.
Whilst we welcome the IFS’ objection to an annual wealth tax, we are concerned that changes to other taxes on wealth – including areas such as Capital Gains Tax and the rules on gifting – may well be in the Chancellor’s sights.
Any consideration of changes to wealth taxes must consider the particular needs of the owners and shareholders in family businesses – and the valuation of their assets. Treating a share in the fabric of a business in the same way as personal wealth would be hugely damaging to the millions of family-run enterprises that deliver growth and employment across the country – as we have seen from the changes to BPR and APR unveiled last year.
Private and family-owned businesses are the backbone of the UK economy, employing more than 15 million people and contributing hundreds of billions in tax.
Announcements made during last year’s Budget have left many facing considerable challenges. The UK’s growth agenda, which FBUK members back completely, will only succeed if changes to fiscal policy are used to strengthen, rather than undermine, the long-term foundations of family enterprises.