Increasing share of family business wealth is owned by women
An increasing share of family business wealth is now owned by women, suggests new data, says Boodle Hatfield, the leading private wealth law firm.
31%* of family business assets being left to heirs in recent years were owned by women – up from 19% the year before (see graph below).
Boodle Hatfield explains that the rise in businesses owned by women being passed to heirs may reflect how more women are taking leadership roles in family businesses. Rising female presence in family businesses could suggest that the almost universal trend for family businesses to automatically pass to the eldest son is changing.
The value of tax relief qualifying female-owned businesses assets transferred to heirs totalled £5bn in 2015/16*, which is a five-year high, up from £4.4bn in 2014/15.
The firm says that in recent years, more families are looking at opening up control of family businesses to women, although it is still a minority. It is still common for businesses to be male owned. This is perhaps due to the glass ceiling meaning a lower percentage of women have senior level management experience than men.
It is sometimes the case that a share of a family business is held in a trust rather than inherited directly, while in other cases some non-heirs are compensated a lump sum of cash in place of a share in a business. The perception is that fewer women than are given the chance to be more actively involved in the running of family businesses.
Boodle Hatfield adds that a number of women passing on businesses could be wives who inherited the business from their husbands upon his earlier death.
Hayden Bailey, Partner at Boodle Hatfield says: “The data suggests that we are still some way short of daughters being treated exactly the same as sons when it comes to ownership of family businesses.”
“Family business owners are also often concerned about the risk to the business of influence from spouses marrying into the family.”
“The use of trusts to hold the shares in a family business, coupled with a family-controlled board can ensure the family remain engaged in the future of the business and have oversight of the operational board”
Boodle Hatfield explains that family businesses can benefit from 100% relief from Inheritance Tax if Business Property Relief (BPR) is claimed when passed to the next generation BPPR can apply provided the family business is trading and has been owned for at least two years prior to the death of the business owner under current rules.
*Businesses qualifying for Business Property Relief on Inheritance Tax. Year-end March 31 2016. Latest data available. Source: HMRC
This article first appeared in The Times in October 2019.