VISIT ANY one of Yorkshire’s splendid market towns or their surrounding communities and it becomes clear that family-run businesses are the backbone of the rural economy.
From farms to shops, cafes, guest houses and visitor attractions, they are ubiquitous and yet far too often treated unfairly by government.
In the UK, family businesses account for over 60 per cent of businesses in the private sector with agriculture accounts for the highest concentration of family businesses at 89 per cent. Rural Yorkshire is particularly reliant on family businesses because the majority of our farmers and other landowning operations are unincorporated.
Family firms are important, not only for their essential contribution to the economy, but because of the stability they bring to local communities, the responsibility they feel as owners and the values they stand for.
Despite them making such a major contribution, the CLA is increasingly concerned that the unincorporated family business has been overlooked.
Family-run businesses operate under a challenging taxation regime that’s far more complex and costly compared to large and small corporations, giving rise to major tax issues that are unique to rural family business but have been largely neglected by government.
At a time when farmers and other rural businesses face extreme market volatility, it is more important than ever that family-run businesses get fair and equitable tax treatment.
The taxation rules have to be simplified for unincorporated family businesses and a genuine dialogue between rural family businesses and government is needed. Although any simplification can’t be achieved at the expense of tax revenues, the burden of compliance has to be reduced and there needs to be greater clarity when legislation is applied.
In adopting greater simplification the Treasury has to alter a tax system that favours corporate business and which has too great a reliance on promoting growth through reducing their tax.
In July’s Budget, the Chancellor announced that corporation tax will be cut again for businesses from 20 per cent to 18 per cent. He said the rate would be reduced to the new level by 2020, with a one per cent interim cut in 2017 but none of this will benefit the majority of rural businesses and it may even put them at an unfair disadvantage when competing with incorporated businesses.
The Government must act now to end this unfairness if it is to make the countryside more productive.
The Business, Innovation and Skills Select Committee is currently gathering evidence on the Government’s Productivity Plan and will call witnesses and make recommendations later in the year.
The CLA will submit a robust case on behalf of farmers and landowners, calling for a level playing field and also setting out the need for a more ambitious programme to extend broadband and mobile phone coverage, as well as the importance of an effective planning system to encourage development.
Farmers and landowners can play their part too by asking their MP to add their voice to our call for a full review that ends this unfairness and promotes growth and investment for Yorkshire’s family-run rural businesses.
Dorothy Fairburn is regional director of the Country Land and Business Association (CLA) in the North.