Reforms in tax system ‘could lead to 20,000 jobs boost’

The study from the Institute for Family Business (IFB) states that family firms account for 64 per cent of private businesses in Yorkshire and North Lincolnshire, or 213,251 firms.

Across the UK, the family business sector generates revenues of £1.1 trillion a year and provides two out of every five private sector job, the report claims.

Family businesses contribute an estimated £81.7bn in tax receipts to the UK Exchequer, which amounted to 14 per cent of total Government revenues in 2010.

The IFB, a membership association representing family businesses such as Country Style Foods in Leeds, is calling on the Government to boost enterprising family firms by cutting red tape and bureaucracy surrounding employment legislation.

The report also calls on the Government to work with family firms to plan for the future and secure jobs.

In a statement, the IFB said: “The current tax system penalises entrepreneurial families by preventing owners obtaining taxation relief when investing in family business start-ups.

“Restrictions in the Enterprise Investment Scheme (EIS) mean that family members investing in a new family business would receive only half the return on that investment compared with a non-family run start-up that qualified for EIS relief.

“Over a third of IFB members said they would invest more in family start-ups if the law were changed. As a result of changes to these regulations, the IFB estimates that up to 20,000 jobs could be created.”

Grant Gordon, the director general of the IFB, said: “The IFB wants to create a better environment for family businesses to thrive in Yorkshire and North Lincolnshire.

“Family businesses are unique. They offer the economy the benefit of a long-term perspective, and a desire to create successful businesses that are passed down through generations.

“We want the Government to make changes that will promote family business entrepreneurship and make a significant difference to the Yorkshire economy.

“Times are tough, and we’re not asking for special treatment, just a level playing field.”