UK business leaders have urged the government to avoid increasing employment-related taxes in the upcoming Autumn Budget, warning that higher costs could force small firms to raise prices and worsen inflation.
A survey conducted by Employment Hero, which polled 1,000 business leaders, found that 86 per cent are concerned about the Budget’s impact on their companies. Around 59 per cent said they feel the government does not adequately consider the needs of small businesses when setting fiscal policy.
The warning comes after employer National Insurance contributions (NICs) rose from 13.8 per cent to 15.05 per cent in April, a change that many small and medium-sized enterprises (SMEs) say has already put pressure on their finances. Business groups caution that any further increases could harm economic growth and make inflation harder to control.
Employment Hero’s findings suggest that small firms are likely to respond to higher employment costs in ways that could ripple through the wider economy. Almost half (49 per cent) said they would raise prices, 33 per cent said they would delay hiring, and 24 per cent indicated they might consider redundancies.
The report also highlighted lingering effects from last year’s Budget. Some 72 per cent of business leaders said that Chancellor Rachel Reeves’s fiscal measures negatively affected their firms, leaving many still recovering. Despite these challenges, the UK labour market shows signs of resilience, with employment rising 2.3 per cent month-on-month in October and up 1.9 per cent year-on-year.
Kevin Fitzgerald, UK managing director at Employment Hero, said the government must learn from past mistakes. “When you tax small businesses, you tax everyone. Higher costs lead to higher prices, fewer jobs, and less money in people’s pockets,” he said. Fitzgerald emphasized that SMEs employ the majority of the UK workforce and are vital to reviving economic growth and tackling inflation.
“The Autumn Budget is an opportunity to show small firms that the government understands their role in the economy,” he said. “If ministers want to keep Britain working, they need to back small businesses, not burden them.”
Industry leaders across the country are pressing the Treasury to avoid any further increases to employment and investment taxes when Reeves delivers the Budget later this month. Many warn that additional tax hikes could fuel inflation, slow job creation, and undermine confidence among smaller firms already facing higher wage costs, energy prices, and borrowing rates.
With the Budget expected to focus on fiscal tightening to address a multi-billion-pound deficit, business groups caution that penalizing small firms could backfire, reducing growth at a time when the government is seeking to stimulate the economy.
