Over 60 per cent of family businesses are concerned for the future stability of their business due to government wage and tax hikes, and employment rights policy changes.

A staggering 84 per cent say their future looks even shakier should the Chancellor make changes to VAT and personal taxes in the upcoming Budget.

According to research commissioned by independent law firm WSP Solicitors on 2,000 UK family businesses, more than a third risk closure before the next general election in 2029, while almost 1 in 10 expect to shut down in under 12 months.

Nearly 20 per cent say they will have to act sooner and either sell up, close down, or move abroad if the Autumn Budget brings more tax hikes.

There are currently an estimated 4.8 million family businesses in the UK. WSP found that amongst these businesses their biggest concerns ahead of the 26 November are changes to Business Relief and VAT.

46 per cent say changes to company Inheritance Tax rules would knock stability further with 14 per cent pausing passing on the business to the next generation. While nearly three quarters claim increases in VAT on goods and services, or changes to thresholds, could cost the company up to £100,000 a year – with 16 per cent saying costs could reach half a million pounds.

Nearly four in 10 (36%) will pass these costs onto consumers, one in 10 will cut back on staff and wages, and 28 per cent will pause on investment or expansion plans.

Confidence in the economy

Overall, nearly 80 per cent of family businesses are less confident in the economy since the previous Budget brought increases to National Insurance, national and minimum wage, changes to Business Asset Disposal Relief, and a planned uplift in Business Relief.

In the next four years, as well as cutting wages and workforces, and putting up prices, nearly a quarter of businesses will stop or reduce staff bonuses. Budget or no Budget, one in seven will sell the business before the next election due to the economic climate and a strong 37% will definitely, or maybe move the business overseas.

Peter Mardon, commercial director at WSP Solicitors said: “The impact of last year’s budget should come as no surprise, businesses of all shapes and sizes are having to make tough decisions around restructuring, staffing, investment and innovation – it’s a tightrope they have been walking for a number of years against the backdrop of a stagnating economy and cost-of-living crisis.

“What our data highlights though is how thin a rope many family businesses are treading. What may seem like small percentage point changes in taxation, when this is mixed with major policy reform, the knock-on effect on a company’s profitability, and if they can even keep the lights on, is major.

“What is perhaps more concerning than the shorter-term pivoting is their longer-term plans. Many are pausing and cancelling plans to expand, others are suggesting earlier exits, and some, including 28 per cent of the business owners, Managing Directors and Chief Executives we interviewed, are looking to leave the UK all together – taking with them the backbone of country’s entrepreneurialism and innovation.”