Total Tax Contribution of UK Family Businesses
This report from the Family Business Research Foundation, The Total Tax Contribution of UK Family Businesses, provides robust data on the tax contribution of family businesses to the public finances in the UK.
The full report can be downloaded here and a shorter research briefing with the key data can be downloaded here.
The report presents new evidence on the contribution that the family-business sector makes to the UK’s public finances– estimating the tax contributed to be £225bn in 2021. Employment taxes and VAT represent the largest proportion (80%) of all taxes contributed by the firms in our study. The previous assumptions used in the charity’s family-business Sector Report were becoming increasingly outdated and this study was commissioned, with the assistance of PwC, to bring the estimated tax contribution of the UK’s family firms up to date. The results certainly highlight the importance of family businesses to our economy and the Exchequer.
It is interesting to note that the overall proportion of tax contributed by family businesses is similar to other businesses although a comparatively higher value of the tax contribution relates to employment taxes. The importance many family firms placed on contributing to their local community by maintaining jobs, where they could, during the pandemic may be a contributing factor.
There is also some evidence here that providing employment and training to apprentices is an important way that family firms are contributing to the economy, with many of the family firms in this study making use of the UK's apprenticeship levy.
There is much to build on here. The Research Foundation is embarking on new research looking at the ESG performance and impact of family firms, of which taxation forms a part. Looking forwards, the learning from this study will assist us in producing more robust evidence on the overall economic impact of the UK’s family businesses.
For a discussion of some of the key findings from the study, see this article by Martin Kemp (FBRF) and Andy Wiggins (PwC) in CampdenFB