Overwhelming Anxiety Grip Small Enterprises
A significant majority of UK small businesses – 86% – are apprehensive about forthcoming Budget announcements, fearing detrimental impacts on their growth and financial stability. This widespread concern, revealed by research from Novuna Business Finance, points to a deep-seated anxiety within the sector, exacerbated by the prospect of increased financial burdens. The fear is palpable, with 23% of business owners anticipating contraction or even collapse in the immediate three months leading up to Christmas, a figure not seen at such a high level since the first quarter of 2021. This suggests a fragile confidence, where many feel incapable of absorbing further costs or tax hikes.
The primary anxieties revolve around potential increases in taxation and fuel duty. This dual threat looms large, with specific concerns varying across sectors and regions. For instance, the agricultural sector worries most about changes to tax thresholds, while transport and distribution businesses are particularly concerned about rises in National Insurance. Real estate firms are fixated on potential hikes in Income Tax and Capital Gains Tax, and the retail sector expresses significant unease over VAT increases and a lowering of VAT registration thresholds.
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Specific Sector and Regional Worries
Agriculture: 45% of businesses fear changes to tax thresholds.
Transport & Distribution: 68% express apprehension over further National Insurance rises.
Real Estate: 68% are concerned about Income Tax increases, with 51% worried about Capital Gains Tax.
Retail: 63% fear VAT rises, and 37% are anxious about a lower VAT registration threshold.
Construction: 55% are worried about increases in fuel duty and further taxes on petrol or diesel vehicles.
Regional anxieties also surface:
Scotland: 58% fear VAT rises, and 42% are concerned about tax threshold changes.
East Anglia: 56% are most worried about Income Tax hikes, and 32% about Capital Gains Tax.
South East: 65% are troubled by further National Insurance increases.
North East: 48% identify increased fuel duty as their top concern.
North West: 38% are most concerned about a rise in the National Minimum Wage.
Beyond Taxation: A Broader Spectrum of Concerns
The anxieties extend beyond just direct taxation and fuel costs. A list of potential Budget announcements that small businesses believe would negatively impact their operations includes:
Raising National Insurance
Raising income tax
Increasing fuel duty
Further taxes on diesel or petrol vehicles
Tax on pensions
Changing tax thresholds
Raising minimum pay rates for low earners
Raising Capital Gains Tax
Mandatory flexible working / 4-day week
Introduction of a new wealth tax
Employees receiving parental leave/statutory sick pay from day one
Lowering the VAT registration threshold
Cuts to ISA/personal savings allowance
Banning zero-hours contracts
Changes to salary sacrifice options
A Shifting Business Landscape
Adding to the uncertainty, research indicates a trend of UK small businesses focusing more on the domestic market than international expansion, a departure from previous years where engagement with the European Union was more prominent. This inward turn is occurring despite government efforts to promote trade deals with non-EU and US partners. Flexible working policies and potential impacts on the property market, particularly concerning Capital Gains and Inheritance Tax, also feature among the worries of traditional and property-focused businesses respectively.
The sentiment is echoed by Jo Morris, Head of Insight at Novuna Business Finance, who advocates for a "Budget for Business" that eases tax burdens, assists with operating costs, and makes hiring more affordable, acknowledging the commitment to national growth but emphasizing the need for support structures for small enterprises.
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Background
The data emerges from polls conducted by Novuna Business Finance, which has been tracking small business growth outlook quarterly for 11 years. The latest findings were published in November 2025, with reports also appearing in October and November 2025. This period precedes an Autumn Budget, where such announcements are typically made. Concerns about potential economic downturns are underscored by figures showing a rise in fears of contraction or collapse.
