The Federation of Small Businesses says last week’s Autumn Budget failed to address the cost of employing staff, against a backdrop of weak revenue expectations and cautious recruitment plans among small firms.
The group welcomed some measures to encourage enterprise but argued that the announcements fell short of the help existing businesses needed with energy bills, employment costs and business rates.
Its latest national Small Business Index found that 47% of respondents expected revenues to shrink in the coming months, compared with 22% anticipating growth. Meanwhile, 18% planned to reduce headcount and just 6% expected to increase it.
The survey covered 1,033 small business owners and sole traders between 10 and 24 September, before the Budget.
Tina McKenzie, national chair of FSB, said: “This Budget should have been the moment to help small businesses with the soaring costs holding them back, and the taxes restricting job creation. Instead, they got nothing to ease sky-high energy bills and nothing to make hiring someone more affordable, while the increase in business rates relief excludes too many.”
FSB welcomed the increase in Small Business Rate Relief for retail, hospitality and leisure firms but said the change should have extended to other sectors.
Tina said: “Small businesses blighted by the rates system aren’t just on the high street.”
Manufacturers, small exporters, nurseries and office-based businesses were among those she identified as needing support.
The Government said the higher relief threshold would take a further 70,000 retail, hospitality and leisure businesses in England out of business rates altogether. Its wider energy package also included support for eligible energy-intensive manufacturers from April 2027.
FSB was more positive about measures aimed at encouraging people to start businesses, including an increase in the Trading Allowance from £1,000 to £3,000 and a new Young Entrepreneurs Allowance. It also welcomed parental pay rights for self-employed fathers and partners.
The group backed the Government’s adoption of 14 of the 15 recommendations from the Small Business Regulation Taskforce, which it co-chaired. These included reversing plans to require even the smallest businesses to submit profit and loss declarations to Companies House.
However, Tina called for clarity over how the proposed Founders’ Relief would compare with Business Asset Disposal Relief for established business owners.
The Government launched a technical consultation alongside the Autumn Budget. The proposed Founders’ Relief would offer qualifying founders and significant early investors in high-growth, innovative UK companies a 10% capital gains tax rate on qualifying share disposals, up to a lifetime limit of £10 million of gains, from 6 April 2027.
Tina said: “The Chancellor must urgently clarify whether he intends to tax or back those who spend a lifetime running and growing successful businesses.”
