UK business leaders have urged the government not to increase employment costs in the upcoming Autumn Budget, warning that higher taxes could force small firms to raise prices and worsen inflation.
A new survey by Employment Hero found that 86 per cent of 1,000 business leaders are worried about what the Budget will mean for their companies, with 59 per cent saying they believe the government does not take the needs of small businesses into account when setting fiscal policy.
The concern comes after employer National Insurance contributions (NICs) rose from 13.8 per cent to 15.05 per cent in April — a move that many SMEs say has already strained their finances.
If Chancellor Rachel Reeves raises employment-related taxes again, business groups say it could “damage the government’s mission to drive economic growth and control inflation.”
Almost half of small and medium-sized businesses (49 per cent) said they would raise prices if employment costs increase, while 33 per cent said they would delay hiring and 24 per cent would consider redundancies, according to Employment Hero’s findings.
The report also noted that many small firms are still recovering from the effects of Reeves’s first Budget last year, which 72 per cent of leaders said negatively impacted their business.
Despite these concerns, Employment Hero’s data showed signs of resilience in the UK labour market, 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,” he said. “Higher costs lead to higher prices, fewer jobs, and less money in people’s pockets.”
Fitzgerald argued that SMEs — which employ the majority of the UK workforce — are key to reviving 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.”
Business leaders across the UK are pressing the Treasury to avoid further tax increases on employment and investment when Reeves delivers her Budget later this month.
Many fear that another round of tax hikes could fuel inflation, stunt job creation, and undermine confidence among smaller firms that are already contending with higher wage costs, energy prices, and borrowing rates.
With the Budget expected to focus heavily on fiscal tightening to fill a multi-billion-pound deficit, industry figures warn that punishing small firms could prove counterproductive — dampening growth at the very moment the government is seeking to reignite it.
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Business leaders warn Budget tax hikes could trigger higher prices