Third of family firms facing closure before the next election
More than one in 10 businesses are expected to shut in the next 12 months, a quarter make redundancies and a fifth are putting a freeze on hiring, according to new research.
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More than 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.
Pre-Budget some 84 per cent said their future looked even shakier if the Chancellor make changed to VAT and personal taxes in her end of year statement.
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 said they wuld 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 November Budget were changes to Business Relief and VAT.
Forty six per cent said 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 claimed 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 per cent) said they would have to pass these costs onto consumers, one in 10 said they would cut back on staff and wages, and 28 per cent would pause on investment or expansion plans.
Nearly 80 per cent of family businesses said they were less confident in the economy since the previous Budget (2024) 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 said they would stop or reduce staff bonuses.
Budget or no Budget, one in seven said they would sell the business before the next election due to the economic climate and a strong 37 per cent will definitely, or maybe move the business overseas.
Peter Mardon, commercial director at Gloucestershire-headquartered 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.”
Lucy Dunlop, owner of Bar Limon in Malvern, Worcestershire, which opened four years ago, employing up to 20 staff, said: “I was hopeful that a Labour government would bring in some progressive policies to incentivise and boost small independent businesses but with every Budget, it feels like we’re being asked to do more with less.
“I was looking to open a second bar or restaurant, we even started scoping out premises however, this is all on hold as I do not wish to open myself up to greater risk.
“Increased costs mean I have had to cover more shifts to save on staff outgoings. We’ve now had to cut hours and not rehired when people have left.
“As a relatively new business it can take three to five years to enter profitability, which I was projecting to make this year, but we’re now looking at breaking even again and that’s without paying myself properly.
“There is only so much I can pass on to the customer without them baulking at menu prices.
“If VAT increases, I will seriously have to reconsider whether to stay in the game. In countries where independent restaurants thrive, VAT rates are half of what we face here.
“Reforming business rates and introducing a fairer, more nuanced VAT system could give small independents the breathing space to flourish again - the fact my patatas bravas attract the same rate as a Lamborghini is absurd!
“The hospitality sector isn’t just about food and drink it’s about people, community and culture - giving young people their first job experience, offering healthier, locally sourced food not just fast food, being a place where people can meet and supporting a wider local community and supply chain.
“If small independents disappear, the loss will be felt far beyond our high streets.”
Peter Mardon added: “Family businesses are the backbone of UK innovation, driving fresh ideas, local jobs and they contribute significantly to the long-term strengthening of our economy.
“It’s deeply worrying that, against the current economic backdrop, confidence is low and so many are now at risk of closing or leaving the UK altogether, taking with them not just jobs, but the country’s future success.”
Luke Lutman, chief executive officer of the Gloucester Chamber of Commerce, said: “A struggling UK economy along with global issues have created strong headwinds over the last year, increasing costs to do business, and the speculation in the run-up to this year’s Autumn budget has caused further pain.
“Small and family businesses feel these challenges the most, with limited resources and ability to absorb the rising costs due to small margins and limited economies of scale.
“With costs increasing and the cost-of-living crisis reducing consumer spending power, businesses are feeling the pinch, having to economise in any way they can, cutting back on employees and shifts is one of the only options available to them.
“The loss of employment may be the most concerning issue we face, with knock on effects for standard of living for workers, as well as reducing their purchasing power.
“Small and family businesses are concerned what the budget will bring and what extra they may be asked to give to support the economy, or if they’ll be asked to increase staff wages once again.
“As such, businesses have put the brakes on any plans to expand or take risks. This has strangled the UK economy with businesses returning to survival mode.
“For the economy to flourish businesses need to be confident in moving forward, to plan to grow, they need to believe that better times will come and importantly be in a position to make the most of it.
“For this to happen, inflation needs to return to a manageable rate, and stabilise, to stop costs going up. The government needs to look elsewhere to fill the holes in the public finances.”
*2,000 UK family business owners, CEOs or MDs working in a family business of any size or turnover completed the survey online between 27th October 2025 and 29th October 2025.
This press release was sent to Raikes in November 2025 by HeadOn PR Ltd.
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