Half of British small business owners plan to pass on their business to their children when they retire, according to recent research.

In the survey, carried out by Close Brothers Asset Management, it was found that 63 per cent of the 837 employers asked are planning to pass their business on to a family member when they retire, with 48 per cent wanting to hand down to their children.

The likelihood of an owner being succeeded by their children depended on the industry. Business owners from the transport industry were the most likely at 75 per cent to pass their business on to their offspring. The wholesale and distribution industry were found to be the least likely to pass on their business at 43 per cent.

While many business owners are planning to pass their business to the next generation, a large proportion of SME owners don’t have any plans at all for their business’ succession in place, as one in ten admitted they hadn’t even thought about it yet.

Patrick Haines, Regional Head of Advice at Close Brothers Asset Management, commented: “SMEs are the building blocks of the economy, and their longevity is crucial.

“Many are already multi-generation family businesses, but whether a company is newly formed, or centuries old, it’s encouraging that the majority of SME owners plan to protect their business and its heritage, preparing children or family members to take over at the helm.”

Business owners are also reminded to be aware of the tax implications that will arise when they come to retire. Four in ten business owners don’t have plans in place to cope with the implications of extracting profit from their business when the time comes to retire.

Patrick said: “Business owners need to ensure they have the relevant plans in place to maximise profit from their business when they retire to help fund their retirement. The hard work that goes into setting up and running a business can be lost if proper planning isn’t in position when approaching retirement. This can be simple if business owners seek the right guidance early, placing them in a stronger position to protect their wealth.”