A significant number of UK small and medium-sized enterprise (SME) leaders are considering relocating themselves, their companies, or both overseas due to rising taxes and regulatory costs, according to a new report by Rathbones. The research, published just weeks ahead of Chancellor Rachel Reeves’ Autumn Budget, highlights growing unease among business owners about the country’s economic environment.
The report found that one in eight SME leaders are contemplating moving abroad. If these plans were carried out, around 680,000 of the UK’s 5.67 million SMEs could potentially leave, raising concerns about the impact on jobs, tax revenues, and economic growth. Among those considering relocation, a third are exploring moving their businesses, with Ireland, Dubai, and the United States emerging as the most popular destinations.
The survey revealed broader dissatisfaction among SMEs, with 66 percent believing the government is not doing enough to support business growth and over 40 percent saying current policies actively hinder enterprise. Concerns go beyond taxation, including higher employers’ National Insurance contributions, increases in the national living wage, and complex new regulations that many respondents say are making it harder to expand.
Ade Babatunde, senior financial planning director at Rathbones, said, “SMEs are the backbone of the UK economy, and the fact that many are considering leaving because of taxation is deeply concerning. Their departure would mean the loss of valuable jobs and tax revenue at a time when the government is trying to boost growth.”
The findings coincide with warnings from other business groups. The British Chambers of Commerce reported that small exporters are struggling under post-Brexit trade rules, while insolvency specialists Begbies Traynor noted a sharp rise in SMEs facing financial distress, particularly in consumer-facing sectors. Many firms are also preparing for potential changes to income tax, capital gains tax, and business rates in the upcoming Budget, following last year’s increases in employers’ National Insurance and CGT.
SMEs employ around 60 percent of the UK workforce and represent 99 percent of private sector businesses. Analysts caution that persistent fiscal pressure on smaller firms could curtail investment, slow hiring, and weaken long-term economic growth. Babatunde added, “The government needs to offer more targeted support for SMEs, whether through tax relief or policies that incentivise growth and risk-taking. Otherwise, we risk seeing a significant exodus of talent and businesses at a time when the economy can least afford it.”
The report adds to the pressure on Chancellor Reeves to reassure business leaders that her Autumn Budget will not further burden SMEs. Economists suggest that with signs of slowing private investment and rising unemployment, the Budget could be pivotal in determining whether the UK remains a competitive environment for entrepreneurs.
As one industry figure noted, “Britain cannot tax its way to growth — it needs to back the very people creating it.”
