What challenges are family businesses facing today?

The UK is going through a period of uncertainty. The economy is struggling to recover from the Covid-19 pandemic, we’ve had months of political uncertainty and the rise in the price of necessities such as energy and food have caused inflation to rise to a 40-year high of 11.052%. As a result, businesses are under mounting pressure like never before.

Accounting for more than 88% of private companies in Britain, family businesses are known for their resilience as well as an innovative and visionary approach. A recent survey by Family Business United  showed that of those surveyed, for 76% of them the economic climate was the top challenge. Proving that much like the rest of the UK the rising cost of living is a concern for a sector our economy relies on greatly.

Family businesses are a British success story, recognised worldwide for forward-thinking and risk taking. They are the backbone of the UK economy providing jobs for around 14 million people and contributing to local communities and high streets. Despite this the family business sector has been struggling with the fallout from Brexit. The full economic impact of Brexit cannot be measured however, the recent survey by Family Business United showed that Brexit is having an effect on family businesses. Of those surveyed the rising cost of labour and raw materials was a concern for 60% and supply chain Issues were a concern for 48%. This fallout from Brexit coupled with the rising inflation and interest family businesses have been battling for the last 6 months has had a damaging effect on businesses ability to invest in their future. This poses a threat to the future of the business.

The new Chancellor, Jeremy Hunt recently gave the Autumn Statement which provided a degree of certainty for businesses. Prior to the statement it was speculated that there would be what was described as a raid on business that has thankfully not gone ahead. There are positives to be taken from the statement such as The Office for Budget Responsibility forecasting the economy growing 4.2% this year and income tax thresholds and inheritance tax thresholds remaining frozen until 2028. However, businesses are still facing challenges around business rates and there will be an increase in the corporation tax rate from April 2023. The reduction of the Dividend Allowance will prove troublesome for small business owners who received limited support throughout the pandemic and face an uncertain and difficult winter.

Family businesses have always shown that they are resilient and can weather a storm. However, even with the certainty given by the Autumn Statement there will be concerns about the profitability and sustainability of these businesses. There will be loans that need paid, deferred rates and tax bills alongside the rising cost of living. In previous years, the challenges for these businesses centred around succession, future proofing for the next generation and governance. The Family Business United Survey has shown that priorities have now shifted, these are still challenges but they may not be at the forefront for businesses.

Being proactive and thinking one step ahead will always be the best way to achieve business goals. Running a business right now is challenging however, armed with innovation and resilience family businesses will be able to adapt and make necessary changes to improve profitability and ensure their survival.

If you would like to know more about how we can support and advise family businesses with successions and other matters, contact Paula Fraser, or any of our Family Business team.

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Working from Home – will the tax relief be axed?

Throughout the COVID-19 pandemic, workers across the country have been required to work from home due to national lockdowns and to curb the spread of coronavirus. As a result, and to help with the cost of increased household expenses, the government allowed a concession whereby workers could claim an allowance of £6 per week (raised from £4 per week in the previous tax year).   

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2021 Year in Review: Food, Drink and Hospitality Sector

As we look back over the food, drink and hospitality sector in 2021 what are the key words that have shaped the year? Covid, Brexit, human capital challenges, sustainability and organisational agility all immediately come to mind.

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Hybrid Working at AAB

At AAB we’re always looking to progress both to enhance our awesome client experience and provide a platform for our people which reflects this. The latest changes follow discussions and feedback from the team around working policies in ‘the next normal’. As a result, we are happy to announce that we have introduced hybrid working for all staff (as of 1 April 2021) and enshrined this in our employment contracts for all existing and new staff across our offices in Aberdeen, Edinburgh and London.

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Recovery Loan Scheme – The key information

The UK Government’s £75bn Recovery Loan Scheme (RLS), launched earlier this week, to provide financial support to businesses affected by the pandemic. The scheme, which will be open until 31 December 2021, can be accessed to fund working capital, investment and growth. There is no turnover restriction for businesses accessing the scheme.

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Coronavirus Job Retention Scheme extended until September 2021

Following on from the Budget that was delivered by the Government yesterday, Wednesday 3rd March, it has now been confirmed that Coronavirus Job Retention Scheme (CJRS) will be extended until September 2021.

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Further Extension to VAT Rate Cut for Tourism & Hospitality Industries

Following Rishi Sunak’s budget announcement earlier today the temporary reduced rate of 5% VAT for the Tourism and Hospitality Sectors has been extended for a further 6 months until 30th September 2021.  Furthermore, an interim rate of 12.5% will be introduced for the sector from 1st October 2021 until 31st March 2022. Thereafter the standard rate of VAT will apply again.

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Did you defer your VAT due to COVID?

*Updated 23 February 2021*

The VAT Deferred payment scheme is now open and can be applied for using the following link: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

If you have any queries regarding the scheme, please contact your usual AAB contact.

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Furlough and beyond

Since the Coronavirus Job Retention Scheme (CJRS) was first thrust upon us just over 10 months ago, it has acted as an unprecedented support mechanism in helping employers and employees across the whole of the United Kingdom cope with the uncertainty in surviving as a business whilst also retaining employees in their jobs. Although all jobs have not been saved, thousands of jobs, have thankfully been saved due to the scheme.

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Could Wealth Taxes be an option to pay for the COVID-19 deficit?

The Wealth Tax Commission have now published their final report which considers whether a UK Wealth Tax should be introduced, and if so, how this could be applied. Although the Chancellor was quoted in July 2020 as dismissing the introduction of a Wealth Tax, the deficit as a result of the COVID-19 pandemic has continued to increase and six months on the country is back in a state of lockdown with much of the economy closed for business. The Commission have estimated that a one off Wealth Tax could raise one-quarter of a trillion pounds.

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