The 2025 UK Budget Just Made Life Harder for Small Businesses: Here's How to Fight Back
By Zamiha Desai MBE, Founder of RecommendAsian, ProfessionalAsian & MiniAsianLet's not sugarcoat it: this year’s Budget is a kick in the teeth for small business owners and entrepreneurs. Between tax hikes, rising costs, and a shaky economic outlook, the government's latest move threatens to squeeze the life out of the SMEs that keep this country running.
Sure, there are some rumblings about "supporting" small businesses, like cutting business rates for some shops, pubs, and cafés. Still, when you look at the full picture, it's clear that the people running most small shops, startups, and independent firms are the ones getting hammered.
What we know:
What's hitting your wallet
Frozen tax thresholds are stealth tax rises. As wages and prices go up, more of your money gets taxed, leaving less to spend, and that’s bad news for everyone, especially consumer-facing businesses.
Dividend taxes are jumping from April 2026. If you're paying yourself through dividends (like many small business owners do), expect to hand over more to HMRC. Rates are climbing from 8.75% to 10.75% for basic-rate taxpayers.
Staff costs keep climbing. Minimum wage is up, employer National Insurance is already up, and suddenly hiring someone new (or keeping your current team) feels like a stretch.
Business rates relief? Don't get too excited
Yes, some retailers, hospitality venues, and leisure businesses will see lower business rates, and that’s a win if you're on the high street. However, for most small businesses already struggling to stay afloat, dealing with supplier price hikes and customers watching every penny, this relief barely scratches the surface.
The bigger picture: growth just got harder
Beyond the immediate pain, this Budget makes long-term planning a nightmare. Higher taxes on dividends, investment income, and capital gains mean that selling your business, expanding, or even planning succession has just become more complicated and more expensive. Many entrepreneurs will simply hit pause, and that's bad for everyone.
What small business owners need to do now
This isn't the time to throw in the towel. Britain's entrepreneurs, freelancers, and small firms are tougher than this. Here's what you need to do:
Sort your cash flow NOW. Don't wait until December to realise you're in trouble. Cut costs where you can and update your projections.
Take whatever help you can get: whether it's business rates relief or sector-specific grants - but don't fool yourself that they'll fix everything.
Rethink how you pay yourself. Maybe it's time to keep more money in the business, reinvest in growth, or focus on building steady, recurring revenue instead of relying on dividends.
Find your people. Join trade groups, connect with local networks, swap advice, refer customers to each other. You'll get through this faster together than alone. We proved it in Covid, and we’ll prove it again now.
The Bottom line: It's tough, but don't stop.
This Budget fundamentally makes running a small business harder. But small businesses are the backbone of the UK economy, and the best shot we've got at bouncing back. The ones who support each other through informal networks like ours, whilst adapting fast and watching their numbers like hawks will survive and thrive, proving what resilience really looks like when the going gets tough.
