A new survey has revealed that 86% of UK small business owners are concerned that potential tax hikes 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 from regulatory changes, particularly around flexible working and property-related taxes.
The survey of over 1,000 small business owners showed that while optimism for growth has recently risen to a two-year high, many businesses fear fiscal changes that could stall this fragile recovery. Following the General Election, the proportion of small businesses predicting growth increased from 30% to 35%, signalling renewed confidence after years of stagnation. However, of the businesses optimistic about growth, 78% also expressed concern that the Autumn Budget could adversely impact their plans.
Key concerns by sector
Small businesses across various industries highlighted specific concerns based on their operational needs and cost structures. Here’s a breakdown of sector-specific worries:
Manufacturing, Transport, and Distribution: These sectors are particularly anxious about national insurance hikes (61% of manufacturing and transport businesses) and fuel duty increases, with 68% of transport businesses seeing this as a major threat.Retail and Property: Rising income tax was a top concern for retail (56%) and property businesses (56%), given the potential impact on consumer confidence and spending power.Hospitality and Manufacturing: The impact of mandatory flexible working policies and raising minimum wage rates is worrisome for hospitality (42%) and manufacturing businesses, as these could increase costs and disrupt operations.Property Sector: Small businesses in property fear that increases in Capital Gains Tax and Inheritance Tax (48%) could 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 precariousness of recent growth trends, explaining, “The upturn in July was welcome news, but it’s still frail. Small businesses need support to fuel their growth plans, but added fiscal burdens could stall this recovery.”
Balancing optimism with budget anxieties
With inflation easing and moderate growth reported in August, small businesses are optimistic but wary. The timing of the Budget is crucial, and fiscal measures that support rather than stifle business growth could play a decisive role in determining the UK’s economic trajectory as 2024 draws to a close.