86% of SMEs fear Budget will damage growth

More than eight in ten small businesses across the UK fear that the forthcoming Autumn Budget could include measures that would harm their plans for growth, according to new research from Novuna Business Finance.

The study reveals that 86% of small business owners are anxious about potential Budget announcements they believe could adversely affect their operations, with rises to taxation and fuel duty topping the list of concerns.

The findings come as small business confidence continues to slide, with only one in four (25%) enterprises now predicting growth in the months ahead — the fourth consecutive quarterly decline and the lowest level in five years. At the same time, the proportion of business owners expecting contraction or even collapse has risen to 23%, the highest since early 2021.

These figures underscore a climate of fragile confidence, with many entrepreneurs saying they would struggle to absorb any further increases in taxes or costs.

What small businesses fear most

While the contents of November’s Budget remain uncertain, Novuna’s poll of 1,000 small business owners provides a clear picture of what measures are most feared.

Top of the list is a potential rise in National Insurance contributions (59%), followed closely by possible increases to VAT (50%), income tax (50%), and fuel duty (37%).

Further taxes on diesel and petrol vehicles (35%) and potential changes to pension tax (34%) are also major worries, reflecting widespread concern that higher costs could further erode already tight margins.

Raising national insurance	59%
Raising VAT	50%
Raising income tax	50%
Increasing fuel duty	37%
Further taxes on diesel or petrol vehicles	35%
Tax on pensions	34%
Changing tax thresholds	30%
Raising the minimum pay rates for low earners	28%
Raising Capital Gains Tax	28%
Employers bound to offer flexible working / a 4-day week	27%
Introduction of a new wealth tax	24%
Employees getting parental leave/statutory sick pay from day one of a new job	22%
Lowering the VAT registration threshold for small businesses	21%
Cuts to the ISA/ personal savings allowance	20%
Banning zero hours contracts	13%
Changes to salary sacrifice options	12%

Sector differences

Concerns vary sharply across industries:

• Agriculture: Most worried about changes to tax thresholds (45%)
• Transport & Distribution: Fear rises in National Insurance (68%)
• Real Estate: Concerned about increases to Income Tax (68%) and Capital Gains Tax (51%)
• Retail: Anxiety over higher VAT (63%) and lower VAT thresholds (37%)
• Construction: Particularly vulnerable to higher fuel duty (55%) and further taxes on diesel or petrol vehicles (55%)

Regional variations

Regional differences also emerge in the research:

• Scotland: Greatest fears of VAT rises (58%) and changes to tax thresholds (42%)
• East Anglia: Concerned about increases to Income Tax (56%) and Capital Gains Tax (32%)
• South East: Wary of higher National Insurance (65%)
• North East: Fuel duty increases are the top worry (48%)
• North West: Most anxious about further rises in the National Minimum Wage (38%)

“For the last 11 years, Novuna Business Finance has been tracking small business growth outlook every quarter. Events such as Brexit, COVID, the Scottish Referendum and Budgets are all moments when we have captured the impact of events on small business outlook.

“The latest findings are not about double-guessing what will or won’t be in the Autumn Budget, but the findings tell us a lot about how small business owners see the world and what may help or hinder their growth.

“The last four quarters have seen consecutive falls in small business confidence, and this is perhaps the long-tail of the cost-of-living crisis – such as rising supplier costs, the burden of energy and fuel costs and mounting staff costs. What our new research tells us is small businesses cannot keep absorbing market pressures to their cost-line and cashflow.

“We are all committed to growth in this country, but small businesses need a ‘Budget for Business’ – one that eases the tax burden, helps with the operating costs and makes hiring people more affordable. Help here will do a lot to power growth into 2026 and beyond.”

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