8 Things Small Businesses Really Wanted from The Budget

For many small businesses (SMEs), this year’s Budget represented a chance for the Government to ease some of the pressures that have steadily intensified over the past few years. 

Rising operating costs, shifting regulations and a general sense of uncertainty have made long–term planning difficult. Ahead of the announcement, employers were clear about the areas where meaningful support would make the biggest difference. These are the measures they wanted most: 

Relief from Day-to-Day Costs

The most immediate hope for SMEs was help with basic operating expenditure. 

Many have been absorbing higher wage bills, insurance increases and energy costs without the resources larger businesses can draw on, with 25% considering redundancies as a result of last year’s Budget, Employment Hero’s survey of 1,000 business leaders showed. 

The 2025 Budget has offered some limited relief, though its benefits are mixed. On the one hand, the Government has avoided a further increase in income tax or broad-based VAT rises – which could have added more pressure on demand and costs. On the other hand, a rise in the national minimum wage (announced to take effect in April 2026) may increase labour costs for many SMEs.

Davinia McGann, founder of accounting company Dam Good Business and owner of a Peacehaven-based cafe called Le Petit Velo, says that after the Chancellor’s statement, her “biggest overall feeling is disappointment”.

“I have three part-time employees working at the café side of the business, so I really do see the challenges that most of my clients are facing.”

She adds: 

“Freezing income tax thresholds for those who are self-employed, or if you’ve got your own business and you’re on the payroll” means being “worse off” every year. She stresses that microbusinesses “are going to be facing a much higher burden with the increases in minimum wage, which isn’t necessarily going to leave people any better off.”

A Break from Constant Administrative Change

Frequent tweaks to reporting rules and payroll processes have left many managers feeling that compliance never stays still. In the lead-up to the Budget, SMEs wanted to contend with less Government red tape, with Employment Hero data showing one in 5 (21%) saying it was preventing them from making investments. 

Employers weren’t expecting regulation to disappear entirely, but they hoped the Government would slow the pace of new requirements and give SMEs more time to prepare for what lies ahead.

Davinia stresses how important such clarity is for businesses.

 “There’s a lot of hype around changes, and that uncertainty is scary from a compliance perspective. A lot of my clients ask, ‘Is this something I need to worry about? Do I need to start changing everything?’”

“My feedback to them is always the same: most things take a bit of time to come in. So you’ve got time to actually sit down and look at where you are based on your position.”

Predictability in Personal and Business Taxation

Tax stability remained a central concern for small business owners ahead of the Budget. Our data shows that lowering corporation tax is viewed as the most helpful tax-related measure, with almost half (47%) saying it would offer the greatest support. 

Simplifying VAT – or reducing the VAT threshold – followed closely, with one in 3 SMEs saying it would provide significant relief. Together, these priorities highlight a desire for a tax landscape that feels simpler, more consistent and easier to plan around.

Many small business owners were hoping the Budget would avoid sudden tax shifts that might affect how they structure income or manage cashflow. Predictability remains essential – but given the 2025 Budget’s direction, employers may not have the stability they need to plan confidently for the months ahead.

David Bharier, Head of Research at the British Chambers of Commerce, reflects this sentiment:

“We had the employer NIC rise last year, which is what’s driven down business sentiment. And now we’ve got more negative announcements in the pipeline for businesses. We hear stories from businesses saying that they’re holding off on investment and recruitment and might even be looking to downsize in some cases.”

Practical Movement on Business Rates

Business rates continue to act as a major barrier to growth, and Employment Hero data reflects the weight of that pressure. According to the findings, 60% of businesses say rates are restricting their ability to expand. The strain is felt most sharply in London, where 65% of business leaders report that rates are holding them back. The impact also intensifies as businesses scale – 64% of firms with revenue over £10M say rates limit growth, compared with 53% of those under £1M.

The Budget did announce business-rate relief for 750,000 properties, and a transitional relief package for retail, hospitality and leisure businesses with smaller premises (rateable values under £500,000). This could help some smaller firms manage costs into 2026, though it stops short of full reform of business-rates valuations or a broader overhaul.

For firms with physical premises, business rates remain one of the hardest costs to manage. The relief package offers short-term respite, but long-term predictability and fairness remain elusive.

David believes the measure is an example of some of the more welcome moves announced in the Budget: “The permanent reduction in the business rates multiplier was a positive announcement. Business rates have been a longstanding bugbear for a lot of firms that pay tax before they’ve even made a profit or a pound. So I think extending that relief is going to be really welcome.”

Davinia, who provides businesses with accounting and bookkeeping support, has seen some of these positive reactions from the small businesses she works with. She says: “For my clients that have small bricks and mortar businesses, it’s great to see that rates relief is sticking around. I know it was a concern that was going to get taken away.”

Supportive Tax Measures and Incentives

After the fallout from the 2024 Budget, tax relief remains a major priority for small businesses, with 47% saying the most helpful measure would be a reduction in corporation tax. 

VAT simplification also ranks highly. One in 3 businesses say that either simplifying VAT or lowering the threshold would provide meaningful support, making it the second most selected tax-related measure after corporation tax. Micro businesses feel this most strongly – 41% of firms with fewer than 20 employees say VAT changes would be important, compared with 34% of those with more than 50 employees.

The 2025 Budget, however, largely skipped major new incentives or tax reductions for SMEs. Instead, the net effect appears to increase the tax burden over time. There is no new corporation tax cut. VAT thresholds remain unchanged, and no new VAT-related simplification measures were announced. 

More Training Support

Beyond core tax rules, employers also expressed strong interest in relief targeted at skills and innovation. The most desired support overall was for staff training and development, with 50% of businesses identifying it as their top request. This rises to 57% among larger SMEs with 250-499 employees, compared with 43% of businesses with fewer than 50 employees.

David Bharier points out that: “46% of all businesses say they would like to see support for AI implementation from the Government – but support targeted at skills, training, or AI adoption was largely absent from the headline Budget measures. 

“For many SMEs that hoped for fresh funding or incentive-based support for innovation or upskilling – especially at a time of rising competitive pressure – the Budget may feel like a missed opportunity.”

Employment Rights Bill Clarity

The Employment Rights Bill continues to cause anxiety for SMEs, who are worried about the scale of upcoming compliance requirements and the potential cost of implementation. As the Chancellor’s statement revealed, however, anyone looking for further clarity on the matter was left without answers. Not only was it not covered in detail in the Budget, the Office for Budget Responsibility’s analysis didn’t mention it either, leaving many leaders uncertain about timelines and obligations.

David Bharier says the lack of detail is a concern for some businesses: “I think that’s going to be a big area of contention in terms of understanding what’s required on the Employment Rights Bill side, and then becoming compliant.”

Clear Signals About the Future

Beyond immediate support, the broader request was for some level of certainty. Forty-three percent of SMEs identified economic uncertainty and inflation as their biggest barriers to growth, closely followed by rising operational costs (40%) and high interest rates (38%). 

Small businesses wanted a sense of direction, but the Budget largely sends mixed signals. On one hand, the freeze on personal tax thresholds suggests the Government is trying to avoid frequent shocks. On the other hand, the scale of announced tax rises (on dividends, property, and savings), and the decision to raise minimum wage despite tight business margins, suggest costs for many could continue rising.

Whether that constitutes a sufficiently stable environment for long-term investment remains uncertain. Many SME owners may continue to feel cautious – at least until more certainty emerges over business-rates valuations, future tax policy and any further government support.

When asked what businesses had hoped for but didn’t see, David says: 

“There is a broader issue around the narrative for growth or the roadmap for growth. The OBR forecasts are downgraded for the next few years, and we’ve got a very flat growth profile – 1.5, 1.6% over the next few years. The challenge with that is you run the risk of running out of fiscal headroom pretty quickly if you don’t get the growth to justify increasing the tax revenue.”

He explains that long-term growth hinges on three areas:

“We need a very clear narrative to boost the elements of growth, and that is removing all of the trade barriers that businesses currently face and looking at new trade deals for exporters, getting infrastructure approved and built as soon as possible – we saw some good progress today on the Lower Thames Crossing as one example. And then the third element is, of course, AI and the tech revolution that’s taking place.”

With the Budget now delivered, SMEs will be weighing the limited relief offered against the areas where uncertainty persists. While small businesses have a strong track record of resilience and adaptability, clearer long-term direction from Government – on tax, regulation, skills, and growth – will be essential to help them plan with confidence.