A new study has revealed that 86% of UK small business owners are concerned that potential tax rises 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 higher costs arising from regulatory changes, particularly around flexible working and property taxes.
The survey of more than 1,000 small business owners showed that although optimism about growth recently rose to a two-year high, many businesses fear financial changes that could derail this fragile recovery. Following the general election, the proportion of small businesses expecting growth rose from 30% to 35%, indicating renewed confidence after years of stagnation. However, among businesses optimistic about growth, 78% also expressed concern that the fall budget could negatively impact their plans.
Key interests by sector
Small businesses across industries have highlighted specific concerns based on their operational needs and cost structures. Below is a breakdown of sector-specific concerns:
Manufacturing, transport and distribution: These sectors are particularly concerned about rising National Insurance (61% of manufacturing and transport companies) and rising fuel duties, with 68% of transport companies seeing this as a major threat.
Retail and Real Estate: High income tax was a major concern for retail companies (56%) and real estate companies (56%), given its potential impact on consumer confidence and purchasing power.
Hospitality and Manufacturing: The impact of mandatory flexible working policies and higher minimum wage rates is a concern for hospitality companies (42%) and manufacturing companies, as this may increase costs and disrupt operations.
Real estate sector: Small real estate businesses fear that increases in capital gains tax and inheritance tax (48%) will have a knock-on effect, disrupting market stability and investment flows.
Joanna Morris, head of insight at Novuna Business Finance, who commissioned the survey, highlighted the fragility of recent growth trends, explaining: “The improvement in July was welcome news, but it remains weak. Small businesses need support to support their growth plans.” However, additional financial burdens could hinder this recovery.
Balancing optimism and budget concerns
With lower inflation and moderate growth announced in August, small businesses are optimistic but cautious. The timing of the Budget is crucial, and fiscal measures that support rather than stifle business growth could play a crucial role in determining the UK’s economic course as 2024 draws to a close.
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