Chancellor Rachel Reeves has said today’s budget will prioritise economic growth. Still small businesses are bracing for shifts that could raise costs and widen compliance demands. Reeves has already trailed parts of her plans and recent reporting has sharpened expectations. Here are the changes small firms are watching most closely.
- VAT registration threshold cut or registration reforms
Pension minister Torsten Bell previously backed plans to introduce a “sharp cut” to the rate at which small businesses begin to pay VAT, fuelling speculation that Reeves may adopt this in the Budget. The move could bring thousands of small businesses into mandatory registration, adding quarterly reporting obligations and forcing many to adjust prices to preserve margins. - Business-rates reform
Reeves confirmed earlier this month that the Budget will include reforms to the business-rates system aimed at easing pressure on small businesses. The Chancellor said: “We’ve been reforming the business rate system to hopefully give a bit more comfort to small businesses and high street businesses as well.” For small businesses, this could mean reliefs are re-targeted, but also that some rate burdens may shift. Landlords or tenant-businesses are just some of those who could face higher fixed costs.
- Support or incentives for productivity, training and investment for SMEs
Business leaders are urging Reeves to deliver a growth-oriented Budget including support for investment and skills. If unveiled, small businesses could see grants, credits or reliefs to boost training, digital adoption or investment.
- A “blitz on business bureaucracy”
In October, Reeves launched a renewed “blitz on business bureaucracy” to target savings for companies valued at over £6bn. With Labour under pressure to reboot the economy, Reeves said she would “cut pointless admin”. Prospective measures include scrapping a rule for directors of small firms to file a directors’ report with Companies House. - Tax and relief changes beyond headline rate hikes
While direct tax-rate increases may be less likely, freezing thresholds, cutting allowances or tweaking reliefs remain possibilities to fill the government’s fiscal gap. This could raise revenue by pulling more income and business activity into higher effective tax bands without changing the headline rates. For owner-managed companies, like law firms, this could mean higher personal tax on salaries or dividends, reduced value from established reliefs, or a tighter squeeze on disposable income.
Super insightful!