Tax rises and fuel costs top SME Budget concerns

More than eight in ten UK small businesses (86%) fear that announcements in next week’s Autumn Budget could negatively affect their growth prospects and finances, according to new research from Novuna Business Finance.

The survey of 1,382 small business owners found that potential increases to taxation, business rates and fuel duty were among the biggest concerns, highlighting fragile confidence across the SME sector.

More than half (53%) identified further increases to employers’ National Insurance as a potential threat to their business, followed by VAT rises (47%), income tax increases (46%) and higher corporation tax (44%).

Fuel costs were another major concern, with 40% worried about an increase in fuel duty and 37% concerned about further taxes on petrol and diesel vehicles.

Meanwhile, 36% said changes to business rates could negatively affect their growth prospects and finances, rising to 57% among businesses that have been trading for more than 20 years.

SME growth confidence remains fragile

The findings come as just 26% of UK small businesses forecast growth during the final three months of 2026, while 23% expect to contract or struggle to survive over the winter.

Longer-term investment intentions also appear subdued. The proportion of small businesses planning to create jobs as part of their growth strategy has almost halved over the past four years, falling from 28% in 2022 to 15% in 2026.

Looking ahead to 2027, only 8% are considering overseas expansion, while just 5% plan to recruit young people to train and develop.

Other potential Budget measures causing concern include further increases to the National Living Wage (26%), changes to tax thresholds (25%) and higher Capital Gains Tax (24%).

Almost a quarter (22%) are worried about new employment regulations covering flexible working and employee rights, while 17% expressed concern about possible changes to salary sacrifice and pension arrangements.

Construction and transport businesses particularly exposed

The research also revealed significant differences between industry sectors.

Transport and distribution businesses were particularly concerned about further increases to employers’ National Insurance (68%) and fuel duty (69%).

More than half (55%) of construction businesses identified potential fuel duty increases as a threat, while 46% of hospitality and leisure businesses were concerned about changes to business rates.

Jo Morris, Head of Insight at Novuna Business Finance, said: “The depth of concern over next week’s Budget, and the sheer number of issues small businesses are worried about, reflects the challenging economic environment in which they currently operate.

“Following the successive economic shocks from Brexit, the Covid-19 pandemic, and more recently, the cost-of-living crisis, UK small businesses have been forced to adapt to rising costs and unprecedented market uncertainty.”

Morris called for measures that would strengthen SME confidence and support investment and job creation.

“Given the importance of small businesses to the UK’s growth agenda, we need a Budget next week that supports the SME community. In recent months, there has been a focus on giving the public some breathing space from everyday financial pressures. The message from small businesses is that they need support too.

“Positive announcements in next week’s Budget could go a long way towards boosting small business confidence and strengthening their ability to power economic growth and create jobs across the UK.”

The findings underline the importance of next week’s Budget for the SME sector, with many businesses concerned about their ability to absorb further increases in operating costs while maintaining investment and growth plans.