Tighten your seatbelt and assume the brace position. That’s been the UK government’s warning ahead of this week’s Autumn Statement, as it attempts to steer clear of an economic crash without raising taxes for “working people” (not that it can define who that is).
While her predecessor, Jeremy Hunt was peddling promises of tax cuts and giveaways back in March, Chancellor Rachel Reeves has thrown optimism out the window. Faced with a “£22bn” black hole in public spending, a rise in National Insurance contributions for employers looks imminent, as does a hike in Capital Gains Tax (CGT).
This glass half-empty approach might help to protect the government. But it also means throwing cold water on business growth plans at a time when a bold vision is most needed.
Small firms seem to be most affected. Accountancy firm Price Bailey recently found that just 57% of SME bosses think their sales will improve this year, compared to 95% at large companies. Chand Chudasama, Partner at Price Bailey, warns, “concerns that tax rises in the Autumn Statement could fall heavily on small businesses are sapping confidence.”
We heard from UK business leaders about what government support and initiatives they’re demanding from the budget – and what policies they think could do more harm than good.
“Reinstate Entrepreneurs Relief limit”
“The UK has had a leading global reputation for entrepreneurship, although the gloss has come off in recent years following Brexit, political instability and general tax increases. During the General Election the Labour Party proclaimed their support for small businesses, but talk of a capital gains tax hike, and a strongly rumoured employer’s National Insurance increase has raised serious concerns with the UK’s entrepreneur community.
“The Autumn Budget is a ‘knife-edge’ moment for the Government – deliver the right support for entrepreneurs to unleash the growth potential, or anchor private businesses with more tax increases, severely dampening the appetite to take a risk.
“I would encourage the Government to reinstate the £10 million entrepreneurs relief limit, which allows entrepreneurs to pay a reduced 10% tax rate on profits from selling their businesses, compared to the usual 20% rate, and provide a strong signal that Britain is ready to back business.”
“Don’t touch Inheritance Tax relief”
“The Government has pledged that the headline rates of VAT, income tax and NICs for what it terms ‘working people’ will be frozen in the upcoming Budget, and corporation tax will be capped at 25% for the rest of this parliament. However, changes to other taxes which the Chancellor has remained silent on keep many business owners awake at night.
“Removing or restricting business relief for IHT or hiking CGT rates could have a considerable impact on the investment of time, energy, risk and money by business-owners, which in turn could jeopardise economic growth for the UK.
“CGT has historically been charged at lower rates than income tax in order to reward entrepreneurs for the considerable risks they take when founding and growing businesses. Restricting IHT business reliefs may make it more costly to pass businesses on to the next generation which could put the viability of long-standing companies – and the ability to continue employing loyal workforces – at risk if family members of business owners have sizable inheritance tax bills they need to settle. “
Toby Tallon, tax Partner at Evelyn Partners
“Finance policies focused on micro-lending”
“”Many of the nation’s 5.5 million businesses are approaching this Budget with trepidation. Given they collectively represent huge potential for powering UK growth we need measures that boost confidence.
“We need better access to finance, with more government-backed policies focused on micro-lending and scale-up, especially for under-represented entrepreneurial groups.
“Small businesses have been woefully under financed and many also lack financial skills. So there also needs to be more support to make the most of existing funding – and this support needs to be accessible and inclusive.”
“Encouraging people into the workforce has to be a priority”
“From a recruitment perspective, we appear to be in a hiring recession, with employers putting the brakes on their recruitment activities in nearly every sector. The latest UK labour market statistics show that employment has increased very slightly while unemployment has also cooled marginally.
“Some answers may be found in the Government’s draft Employment Rights Bill but further detail will be needed to instil confidence, some of which may be forthcoming in the Autumn Statement.
“For businesses that can do so, encouraging more people back into the workforce has to be a priority. Employers who aren’t currently in a position to hire must stay focussed and strategic with their workforce planning across areas such as skills-based hiring, flexible working, and talent development.”
“Present a clear roadmap to solve late payments”
“Late payments are the number one threat for SMEs across the UK. According to the Federation of Small Businesses, 50,000 companies are forced to close each year because of the cash flow issues that late payments create. This is simply unacceptable.
“The government has promised to tackle this growing problem. We’ve seen the rollout of the New Fair Payment Code, and a consultation has been promised to identify new measures that will improve the payment practices of large businesses to smaller firms – but we don’t know when. We need more details.
“Given the severity of this issue, we’d like a clear update next week from the Chancellor on when the government’s consultation will start, along with information on how everyday business leaders who are experiencing these issues first-hand, can be a part of it.”
- Andrew Martin, CEO and Founder of SMEB
“Confront the energy crisis head on”
“This month’s energy price increase is already hitting businesses hard—just as Sir Keir Starmer marks his 100th day in power—turning the situation into a critical threat for many, particularly in sectors like hospitality, manufacturing, retail, and healthcare.
“When Rachel Reeves steps up to the despatch box on 30th October, we urge the Chancellor to introduce policies that directly support SMEs. Measures like energy bill relief or subsidies for energy efficiency upgrades would provide vital help in managing these sudden cost increases. If the Government is truly pro-business, it must confront the energy crisis head-on to protect the backbone of the UK economy.”
“Reform R&D to drive growth in every corner of the economy”
“The substantial drop in the number of businesses claiming R&D credits in recent years is a concern. A 20% drop is unprecedented, and the fact it is made up almost exclusively of SMEs and lower-value claims, does nothing to diminish perceptions that the scheme is currently biased against smaller businesses.
“It raises the question as to whether HMRC – whose primary role is to raise revenue and ensure compliance – is the most appropriate arbiter of business R&D and whether a separate agency would be more effective. What we need to see from Labour is an understanding of the root of the problems and a proposed solution that still allows R&D to thrive, which is one of the recommendations we set out in our Innovation Manifesto.
“In the run up to the Autumn Statement, the Chancellor needs to seriously consider whether the current system is fostering the best environment to harness the spirit of entrepreneurialism that she’s hoping will drive growth in every corner of the economy.”
- Benjamin Craig, Associate Director of R&D Incentives at Ayming
