Highlights
- Family businesses make up 90 per cent of UK private firms and employ 13.9 m people.
- Nearly 50,000 businesses now in critical financial distress, up 21 per cent year-on-year.
- Ethnic minority businesses contribute £74 bn annually despite facing funding barriers.
“To get the UK economy going you’ve got to use family businesses as the backbone of it, not the BlackRocks or the Vanguards,” Boparan told The Times. He says overseas investment giants “will come in, they will take and they will go. He adds they have no allegiance to the country.” Boparan describes the proposed changes as “horrific” for family businesses and warns they threaten food security as companies think twice about investing.
Family firms make up 90 per cent of all private sector companies in the UK and employ 13.9 million people. These businesses contributed £575 billion to the economy in 2020, accounting for 51 per cent of all private sector employment.
The tax challenge
Boparan describes the proposed changes as “horrific” for family businesses and warns they threaten food security as companies think twice about investing.
“If you look at what the government has done, they are driving businesses abroad,” he said. While Boporan plans to invest £1.75 bn in robotics, AI and new farms in the UK, he admits considering Poland has become more attractive. “You start thinking differently, when really there’s so much more to do in the UK", he said.
Fiona Graham, chief advocacy officer at Family Business UK, has called the inheritance tax changes a major concern. The organisation’s research shows that since the last budget, more than half of UK family businesses have paused or cancelled planned investment, and a quarter have reduced headcount or shelved recruitment.
"For the UK’s family business sector, which employs 14 million people, Business Property Relief (BPR) is not a loophole but a lifeline. Around 85,000 family SMEs transfer ownership each year, and BPR enables smooth succession without triggering an unpayable inheritance tax. Designed to support generational business transfers, BPR prevents inheritance tax from forcing firms to sell or break up to cover liabilities. Without it, many family businesses would face disruption, risking jobs, investment, and long-term growth ", she noted
“Family businesses are the backbone of the UK economy and the bedrock of our communities,” Graham said in a recent interview. She stressed that these firms “offer a sustainable and responsible business model” with people at the heart of operations.
Financial distress rising
According to Begbies Traynor’s latest Red Flag Alert report, 49,309 businesses are now in critical financial distress as of June 2025, a 21.4 per cent increase from the previous year. All 22 sectors covered saw increases in critical distress.
Julie Palmer, partner at Begbies Traynor, said financial distress has intensified across every corner of the economy. “This time last year, there was a degree of optimism amongst business leaders who were hoping to see a shift in fortunes in the second half of the year, but fast-forward 12 months and confidence is in short supply.”
Consumer-facing sectors have been hit hardest. Bars and restaurants saw critical distress jump 41.7 per cent, travel and tourism rose 39 per cent, and general retailers increased 17.8 per cent.
The ethnic minority contribution
Many family businesses are led by entrepreneurs from ethnic minority backgrounds, who face additional hurdles despite making substantial economic contributions. Around 250,000 ethnic minority businesses currently operate in the UK, contributing at least £74 bn annually to the economy based on 2021 report.
People from ethnic minority communities are twice as likely to start a business compared to the general population. Yet these entrepreneurs face significant barriers, including restricted access to funding and support networks.
MSDUK research shows that closing the ethnicity participation and pay gaps could add £37 bn a year to the UK economy. Eight of the UK’s 23 tech unicorns were co-founded by minority entrepreneurs. Charlie Bigham, founder of the meals business bearing his name, told The Times that inheritance tax changes were “catastrophic” for family companies.
Stuart Machin, chief executive of Marks & Spencer, has joined the calls for the government to rethink inheritance tax changes.
