Family businesses "unaware of tax liabilities"

ONE-THIRD of family businesses are unaware of their exposure to capital gains tax and inheritance tax, according to a survey by PwC.

The firm’s report, Kin in the Game, was based on interviews with 1,600 small and medium sized family businesses in 35 countries, including 100 UK companies. One-third of the UK executives were unaware of their domestic exposure to CGT and IHT, PwC said. Two-thirds did not know about the international taxes they or their heirs might incur, the report claimed.

UK businesses fared worse in knowledge of their domestic liabilities than their counterparts in Spain – where 91% of businesses were aware – Brazil (85%) and Germany (73%). However, they were better prepared than France and Denmark, where only half of businesses were aware.

Mary Monfries, tax partner at PwC said: “Tax charges incurred through capital gains or following the death of a member of a family business can be substantial and take money needed for investment in the business so it’s concerning that a third of businesses are unaware of their domestic exposure to Inheritance Tax and Capital Gains Tax.

“And where a family firm is active internationally, owners can find themselves having to navigate a number of complex overseas tax regimes. There is no easy way to do this and it makes sense to get help at an early stage so that family businesses do not risk overpaying tax.”