The Budget 2015 will have some impact on family-run businesses including the proposed introduction of social venture capital trusts; lowering the pension lifetime allowance; and the review of Deeds of Variation.
“There were a host of minor impacts for families running a business, which should prompt a spring clean of a clutch of administrative affairs.”
Social Venture Capital Trusts
“Many family business owners are keen philanthropists and will welcome the Budget’s proposed introduction of social venture capital trusts. These should encourage investment in charities and community benefit schemes by making tax relief on such philanthropy more accessible than last year’s social investment tax relief.”
Reduction in Pension Taxation Lifetime Allowance
“Lowering the lifetime allowance from £1.25m to £1m seems at odds with the government’s encouragement to save for a pension and will affect many family business owners both as individuals and as employers.
“This change will have knock-on effects on the amount individuals wish to save into their pension on an annual basis. This is something for many to consider and has administrative repercussions for their employers.
“While £1m sounds a lot, it buys a circa £30,000 pension and is typically what many middle income earners are likely to achieve by the end of their career. Many family owned businesses may look to assist their employees save for retirement in other ways.”
Deeds of Variation
“A number of families have used Deeds of Variation, consensually adjusting the will of a deceased family member, often to correct tax mistakes or use business and agricultural allowances on death, where a widow and other family members of the deceased want to make a change so that the estate can go to somebody else.
“It’s a shame something that has been around for generations to enable the straightforward handling of estates between families has been questioned as a mechanism for tax avoidance and it may well mean such situations will have to go to Court. This highlights the importance of regularly reviewing the paperwork in connection to wills of family members to ensure they reflect the current situation and wishes of the family.”
Alison Anderson, KPMG Press Office
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.