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By Liz Barclay

At least we know. After all the speculation we’ve had the budget, and businesses can get on with serving their customers and planning ahead. But the road is tough for many. What do the measure announced on 26th November say about how UK government sees small and micro businesses and entrepreneurs?

The Budget was a mixed bag. It’s the first time I’ve heard ‘start-ups, scale-ups and entrepreneurs’ mentioned in a budget speech. I hoped, coming early in the speech, that signalled good stuff, but while there were targeted reliefs, such as extended business rates support and apprenticeship cost reductions, the overall package delivered higher wage bills, dividend tax hikes, and compliance burdens. Government says small businesses are the backbone of our economy and vital to society but prioritising fiscal consolidation and worker protections over entrepreneurial growth doesn’t leave small business owners feeling recognised and appreciated. We know the Chancellor had to balance feeble growth forecasts, stubborn inflation, and a challenging fiscal gap but support for the UK’s entrepreneurial backbone could make the job a lot easier.

The biggest measure was the rise in the National Minimum and Living Wage from April 2026 (£12.71/hour for 21 and over, £10.85 for 18–20 year olds will earn £10.85/hour, and £8 an hour for apprentices and under‑18s. The Living Wage raises pay to £13.45/hour outside London and £14.80/hour in London).

Business owners want to pay fairly. For small businesses in hospitality, retail, or care, higher wages may improve recruitment and retention but the increases will squeeze margins already under pressure. One distraught entrepreneur told me he’d planned to take on 5 people before the April 2025 increases. Now he’s expecting another huge payroll increase in April 2026. That’s a few more jobs he’s no longer planning to create.

All the businesspeople I know think their people deserve more but they want to do that by growing the business so they can afford to increase wages. There’s also the knock-on impact. If colleagues are getting wage increases everyone else in the workplace wants and deserves recognition too and it all pushes the national insurance bill ever higher. Can businesses absorb the increasing costs, or do they have to raise their prices while risking losing customers who can no longer afford their products or services?

The Budget confirmed a 2% increase in dividend tax rates from April 2026. For small business owners who pay themselves via dividends, that’s less take‑home income. Combined with corporation tax, it reinforces the sense of “double taxation” on entrepreneurial spirit. I know quite a few businesspeople who can no longer afford to pay themselves at all. Their income is going down while the risks of being innovative and entrepreneurial are becoming too onerous. There’s quiet closing going on and unemployment is rising.

The budget also brought property tax increases, savings income tax rises and a £2,000 cap on salary‑sacrifice pension contributions.

The good news is:

Lower business rates for over 750,000 retail, hospitality, and leisure properties, worth nearly £900m a year from April 2026.

A £4.3bn support package will cap bill increases for those hit hardest by revaluations. This should protect some independent pubs, shops, and cafés.

Apprenticeships will be more affordable and potentially boost youth employment.

The Enterprise Management Incentive (EMI) scheme will be expanded from April 2026, to cover firms with up to 500 employees and £120m in assets allowing more ambitious businesses to retain talent through tax‑advantaged share options.

Fuel duty is frozen until September 2026, helping logistics and deliveries.

Train fares are frozen until March 2027 helping commuting employees.

There’s also a consultation on making tax incentives more “founder‑friendly,” recognising that entrepreneurs need tailored support to start, scale, and stay in the UK. However, that’s where the sweeteners end. Even extending the sugar tax to mass‑produced milkshakes and lattes, will cause some firms sleepless nights and the 3 pence per mile tax on electrical vehicles wasn’t factored into anyone’s careful financial forecasts when they decided that buying an EV would be worth it.

I feel the budget paints a picture of a government that values small businesses as employers and community stalwarts, but wants them primarily to deliver worker protection and revenue rather than to be encouraged to invest. Wage rises, dividend tax hikes, and compliance measures dominate, while reliefs are targeted narrowly at high street firms and apprenticeships.

The expansion of EMI and consultation on founder‑friendly tax incentives may be positive signals but policymakers need to balance worker protections with genuine support for the risk‑takers who create those jobs, innovate and build resilience across the economy. There’s still a long way to go.

By Liz Barclay

The markets are calm following the chancellor's budget speech. I'm not sure the same can be said for small businesses: minimum and living wage increases, dividend tax rises and the compliance costs associated with the employment rights bill are just the direct costs. Freezing income tax thresholds and various other additional tax costs on members of households could leave the small business owner in the home with less room to use family income to bootstrap their business if that's their preferred way of funding additional business costs.

All the scary stuff that was leaked ahead of the budget may not have come to pass but the damage was done as businesses held onto any resources and didn't invest. We've lost a year of investment that could have increased productivity and contributed to valuable growth. Instead productivity fell by 4.6% in the third quarter of the year due to the speculation and uncertainty.

One change the Chancellor announced that may have been missed is that both the Federation of Small Businesses (FSB) and Small Business Britain pressed the Chancellor to make apprenticeships more affordable and flexible for SMEs, focusing on scrapping co‑investment costs and reforming the levy. They rightly emphasised youth employment concerns and highlighted apprenticeships as a key route to tackle skills shortages and youth unemployment, asking for targeted support for under‑25s.
They wanted apprenticeships for young people in small firms to be fully funded, removing the co‑investment requirement. The Chancellor announced in response that:
Co‑investment will be scrapped for under‑25 apprentices in small businesses, training costs will now be fully funded, extending previous relief (which only applied up to age 21) to cover 22–24 year olds, and £820m “Youth Guarantee”: Funding will ensure every 18–21 year old gets a place in college, an apprenticeship, or personalised job support.
Future reforms were promised: Treasury documents mention simplifying apprenticeship standards and introducing short courses from April 2026.
However, levy reform and broader flexibility remain unresolved, meaning small businesses will still face structural barriers in how apprenticeship funding can be used.
I expect further campaigning on levy reform and flexibility.

The government also announced plans to introduce mandatory e-invoicing for all VAT invoices.
This is to come into force in 2029 and a roadmap to implementing this mandate will be announced in the 2026 Budget. Starting from January 2026, a co-creation process will begin where government will work closely with businesses, representative bodies, software providers, and internal teams to develop the policy and delivery approach. Small businesses may worry about the costs of implementing e-invoicing and the inconvenience of onboarding to customers’ systems but those problems should be ironed out between now and implementation. The upside of this move is that small businesses should find their invoices get paid quicker, there’s less room for making errors in billing etc and there’s less time consuming paperwork to contend with, all making the business more productive.
Another announcement in the Chancellor’s Budget that might affect some small businesses is a major expansion of the Enterprise Management Incentive (EMI) scheme, effective from 6 April 2026. The scheme is one of the UK’s most powerful employee retention tools and allows growing companies to continue rewarding and retaining talent with tax advantaged share options and by expanding it the government aims to strengthen the UK’s entrepreneurial ecosystem.
Instead of being limited to firms with a maximum of 250 employees it will be open to those with up to 500 and a new higher asset limit of £120million. Employees will be allowed a maximum of £6,iooiom in share options instead of the current £3million and to hold them for up to 15 years instead of 10.
Importantly, the extension can also apply retrospectively to existing EMI contracts that haven’t yet expired or been exercised. It’s designed to make EMI more “founder-friendly” and accessible to scale-ups that were previously exempt, as well as start-ups. If the longer exercise periods and higher option limits make EMI more attractive for employees they are more likely to stay with the firm. This is highly unlikely to be a feasible scheme for micro businesses but bigger amll businesses may want to think about it if they would qualify. You could use the higher option limits to design more competitive employee incentive packages.

By Liz Barclay - 4 December 2025

The Budget has been and gone — and small business owners across the UK are left wondering whether anyone in government truly understands what they’re living through. In the weeks since the Chancellor sat down, the one word I keep hearing is disappointment. The second is fear.

For many, this Budget was not just another fiscal event. It was a moment of reckoning. A chance for policymakers to recognise that small and micro firms are running out of road. Instead, what arrived felt like a Budget made with large organisations in mind, while the smallest — the cafés, tradespeople, childminders, hairdressers, shopkeepers and care providers — were once again expected to “cope”.

But small business owners aren’t an abstract economic category. They’re people.

They’re the woman who opens her café at 6am and goes home after the chairs are stacked, wages run and rotas rewritten for the third time that week.

They’re the electrician who hasn’t had a holiday in three years because saying no to work means saying no to income.

They’re the childminder sending invoices at midnight and tackling safeguarding paperwork long after her own children are asleep.

They’re the care agency owner covering night shifts herself because she simply can’t find enough staff.

These people hold communities together. They employ our neighbours. They train our teenagers. They keep our elderly relatives safe and our boilers working. When they struggle, communities struggle. When they close, high streets hollow out and opportunity disappears with them.

And right now, many are closer to that cliff edge than at any point in recent memory.

The pressures that built up throughout the year haven’t gone away just because the Budget has passed. Employment costs remain crippling. The increase in employer National Insurance earlier this year — from 13.8% to 15%, with the threshold cut from £9,100 to £5,000 — still means a café, care agency or workshop is paying hundreds more per employee. Pair that with the higher National Living Wage of £12.21 for over-21s, and payroll costs have risen by 10% or more almost overnight.

In the conversations I’m having daily, owners tell me they’ve stopped paying themselves altogether. Not because business is booming, but because they’re trying to shield their employees from the impact of rising costs.

Meanwhile rents and rates remain high, insurance premiums have jumped, and late payments — costing the economy £11bn a year — continue to choke cashflow. Paperwork still swallows hours that should be spent serving customers. And customers themselves are spending less.

The Budget should have been an opportunity to restore confidence. But confidence remains on the floor.

Small businesses didn’t get the clarity or relief they needed. Rates relief was too limited. The hoped-for rethink on employer NI didn’t materialise. There was little to tackle overdue payments or the crushing administrative burden. For too many firms, survival mode continues.

What small businesses need now is not warm words. They need targeted, practical action.

We still need a rethink on employer NI. If the government wants rising wages, it must ensure employers can afford them. A targeted NI relief scheme for micro employers — particularly in care, hospitality, retail and other low-margin sectors — could stop job losses before they happen.

We still need meaningful business rates reform. Reliefs help some of the time, but the underlying system is outdated and unfairly penalises bricks-and-mortar firms with small turnovers.

We still need strong enforcement against late payments and excessively long contractual terms that allow big firms to sit on small suppliers’ money for months.

And we urgently need to reduce the administrative burden. Right now, compliance is a hidden tax on growth. A simple, joined-up digital portal designed with micro businesses — not just accountants — would save days, even weeks, each year.

Small business owners are not asking for special treatment. They are asking for a fair chance. They want rules that reflect how they actually operate. They want support they can access before crisis hits, not after. And they want policymakers to see them as people, not footnotes.

The danger now is that they make the only decisions left: not hiring, not investing — and too often, not continuing. I speak to owners who no longer replace staff who leave because the risk is too high. Others are switching employees for freelancers to ease National Insurance pressure. Many are cutting hours because they can’t cover shifts and payroll at the same time. Some are taking home next to nothing, leaving their own families unable to pay the bills.

These warning lights aren’t amber. They’re red.

The Budget is behind us. The consequences lie ahead. If the government wants growth, prosperous communities and a resilient economy, it must show — clearly — that it understands the real people behind small businesses. When they thrive, the country thrives. When they are pushed to breaking point, we all feel the consequences.

It isn’t too late to give them a fighting chance. But it has to start now — before too many decide they simply can’t keep going.

Hi - I'm Liz Barclay - I'm one of the founders of Business111.com and I’m launching www.business111.com, a free online resource designed specifically for small and micro businesses — and built from the ground up around what they’ve told me they need.

I used to be HMG's Small Business Commissioner, and now I can work with others to provide you with a resource that you can use anytime.

I want to be completely transparent: it’s a BETA site. We’re at the early stages of development. Not everything will work perfectly first time. Some sections are still being built, others will evolve based on feedback, and a few tools might feel a little rough around the edges. And that’s exactly why I need the people who understand small business life best — you — to help us shape it.

If something doesn’t work, or doesn’t make sense, I need you to tell us. Business111.com isn’t about broadcasting at businesses. It’s about building something with them. It’s designed to grow into a trusted, plain-English, no-nonsense hub for the practical guidance small firms have been crying out for.

Why now? Because small businesses are being hit from every direction: rising costs, skills shortages, complex regulation and the constant fear of making a mistake that could cost them everything. Late payments and long payment terms are wiping billions from the economy. Employer National Insurance has risen. Wages have risen. Rents and rates are rising. And while politicians argue about fiscal forecasts, small businesses have to make payroll on Monday.

For years, I’ve been hearing the same refrain from the smallest businesses: “I don’t know where to find the right advice. Everything is too complicated. Every answer I try to find leads me to something written for big companies, not for me.”

I set up Business111.com because I couldn’t keep asking businesses to navigate a maze I knew was failing them.

As a former Small Business Commissioner, adviser to organisations across the UK, and someone who has spent decades listening to micro businesses in every corner of the country, I know that what people want is clarity. Not jargon. Not 80-page guidance notes. Not contradictory information spread across ten government websites. They want to know, simply and quickly, what they need to do — and how to stay on the right side of rules that feel designed for companies 100 times their size.

Business111.com is the start of that journey. A central point for guidance. A place where small firms can learn about late payment options, employment rights, skills pathways, cashflow pressures, rising costs and how to stay compliant without losing their minds or their evenings.

I’m launching it today — Budget Day — because this is when small businesses feel most excluded. After the headlines fade, they’re left asking: “So what does this actually mean for me?” Business111.com aims to answer that question, not in technical language, but in straightforward terms that respect the time, stress and reality of people running one- or two-person businesses.

It’s free. It’s independent. And it’s being built with one goal: to make running a small business simpler, clearer and fairer.

But it won’t work without the people it’s built for. So please, explore the site, tell us what’s helpful, what’s missing, what breaks, what’s confusing — and what you wish existed but can’t find anywhere else.

Business111.com is for you. With your help, it will grow into something powerful, practical and genuinely transformational for the UK’s most vital business community.

Today’s Budget will set the tone for the months ahead. Business111.com aims to help small businesses understand it, survive it and — hopefully — thrive beyond it.

Please be patient with us. Please be honest with us. And please join us as we build something better together.