Running a family business can have many advantages if managed correctly and in harmony, but it can also bring many challenges which could lead to potential conflicts, affecting business performance and growth.
One key point to consider when running a family business, is creating a clear separation between any family and business matters to avoid any issues that could affect the day to day running of the business and hinder long term business growth.
In our recent blog, our accounting + advisory team layout some key ways to successfully create harmony when running a family business:
Set a clear long-term vision
Setting a clear long-term vision from the outset is essential for the success of any family business. This will help ensure your business goals are aligned, you follow a consistent strategy and therefore decisions can be made quickly and efficiently, avoiding any unnecessary conflict. By establishing a common vision, it means each family member can focus their efforts on what truly matters – ensuring the business runs smoothly and remains resilient through challenges.
Make use of outsider expertise
It is important to reach out for help in areas where the family don’t have expertise. Typically, this includes law and finance but often can include marketing, advertising and sales. Engaging with experts allows for different opinions and a fresh perspective that can help shape your vision and goals. It also allows for unbiased decision making that can form neutral opinions outside of your family views.
Outline clear roles and responsibilities
Setting clear roles and responsibilities from the outset ensures everyone understands their accountability. This helps team members focus on their own work, reduces overlap, and minimises the risk of any conflict or disputes between family members.
Ensure that business and family matters are kept completely separate
Although this can be difficult, especially when you spend time together both at work and outside of it, keeping any family matters separate from business matters will minimise disruption to business activities. It is important to differentiate between both family life and work in order to keep those healthy relationships.
Succession planning
Succession planning is a key challenge for businesses of all sizes. This process should be collaborative and transparent to build trust and continuity. It’s important for all family members within an organisation to understand each individual’s timeline for working in the business and therefore to plan who will take over their roles and responsibilities when the time comes.
What areas of tax should you consider when handing over a family business?
When it comes to retirement for a family business, thought should be given to ensuring any benefit from appropriate tax reliefs is obtained which could help save you a lot of money. There are various ways you can look to do this and it’s vital to understand all the options in detail before making any decisions, however some of the common considerations include:
Capital Gains Tax (CGT)– This should be considered when passing down a business to a family member. Subject to certain conditions, CGT will not be due on a qualifying transfer made as a gift. However if these conditions are not met, CGT may be due on the value as if it were a sale at market value. There are also CGT reliefs which could be used if CGT is payable.
Income tax – It’s important to understand how you will fund a retirement and what levels of income tax you might need to pay. This could depend on whether you retain an interest in the family business and receive dividends or a salary, verses if you were to draw on a pension.
Inheritance Tax (IHT) – This should be considered if a business is passed onto other family members, as IHT could become due. Rules around the reliefs available for qualifying businesses are changing from 6 April 2026, so now is the time to understand what liability could become due on your estate, and whether any planning can be undertaken to reduce the exposure to IHT.
Get in touch
For further information or advice on how we can help you navigate the challenges that come alongside running a family business or help you to plan for the future, please get in touch with a member of the team by emailing enquiries@pmm.co.uk or calling 01254 679131.
