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A new survey has found that 86% of UK small business owners are concerned that potential tax increases and policy changes in the upcoming autumn budget could hinder their growth.
Key concerns include potential increases in income tax, VAT and national insurance, as well as rising costs due to regulatory changes, particularly in the areas of flexible working and property tax.
The survey of more than 1,000 small business owners found that while optimism about growth has recently risen to a two-year high, many companies are fearful of tax changes that could slow this fragile recovery. After the general election, the share of small businesses predicting growth rose from 30% to 35%, signaling renewed confidence after years of stagnation. However, of those businesses optimistic about growth, 78% also expressed concern that the Fall Budget could negatively impact their plans.
Main concerns by sector
Small businesses across industries raised specific concerns based on their operational needs and cost structures. Here is an overview of the sector-specific concerns:
Manufacturing, transport and distribution: These sectors are particularly concerned about national insurance increases (61% of manufacturing and transport companies) and fuel duty increases, with 68% of transport companies seeing this as a major threat.
Retail and real estate: Rising income taxes were one of the top concerns for retail (56%) and real estate companies (56%), given the potential impact on consumer confidence and purchasing power.
Hospitality and manufacturing: The impact of mandatory flexible working policies and minimum wage increases is of concern for hospitality (42%) and manufacturing companies as they can increase costs and disrupt operations.
Real Estate Sector: Small businesses in the real estate sector fear that an increase in capital gains tax and inheritance tax (48%) could have a domino effect, disrupting market stability and investment flows.
Joanna Morris, head of insight at Novuna Business Finance, who commissioned the research, highlighted the uncertainty of recent growth trends, explaining: “The bounce in July was welcome news, but remains fragile. Small businesses need support to achieve their growth plans, but additional fiscal burdens could delay this recovery.”
Balancing optimism with budget concerns
With inflation easing and moderate growth reported in August, small businesses are optimistic but wary. Budget timing is crucial, and fiscal measures that support rather than hinder business growth could play a decisive role in determining Britain’s economic trajectory as 2024 draws to a close.