Supporting Succession?
Supporting Succession? An assessment of the impact of Business Property Relief and Gift Hold-Over Relief on family businesses in the UK
This white paper, prepared by Policy Points and Henham Strategy, assesses the impact of Business Property Relief (BPR) and Gift Hold-Over Relief (GHR) as mechanisms supporting the succession of family businesses in the UK. It synthesizes evidence from literature reviews, expert interviews, and data analysis to evaluate their effectiveness, implications for tax policy, and potential reforms. Designed to inform policymakers and stakeholders, it offers insights into the ongoing debate on the future of these reliefs.
The white paper outlines several key findings:
BPR and GHR have been instrumental in reducing the tax burden for UK family businesses, allowing them to thrive and sustain operations across generations.
The value of the reliefs is worth more than £1.5 billion annually, benefiting thousands of family businesses each year.
The paper assesses the historical development and current workings of these reliefs, along with a comparative analysis of international practices, providing a broader perspective on their implementation globally.
The analysis concludes that BPR and GHR are vital for the financial health of family businesses in the UK, helping mitigate tax liabilities that could otherwise hinder succession and continuity. Any reduction in the generosity of these reliefs would likely lead to increased tax burdens for family businesses.
The white paper also identifies significant gaps in research and evidence in this policy area, which hinder a more complete understanding of the reliefs' broader impacts. For example:
There is limited evidence on the consequences of breaking up family firms that might result from removing these reliefs.
Research on the tax planning processes of family firms and the interaction between Inheritance Tax (IHT) and Capital Gains Tax (CGT) reliefs is lacking.
Baseline data on the use of GHR remain incomplete, as publicly available information does not capture the full extent of claims.
To address these evidence gaps, the report recommends:
Conducting structured interviews and surveys with family firms, tax advisers, and other stakeholders to understand the practical consequences of removing or restricting these reliefs.
Encouraging further academic and policy research into the interplay between tax reliefs and family business succession to better inform future policy decisions.
These steps could help ensure that policy in this area is evidence-based and aligned with the economic and social needs of family businesses and the broader UK economy.