Business

Four standout teams have been crowned winners of the Isle of Man Innovation Challenge 2025, following a global competition showcasing cutting-edge solutions in cleantech, data and AI, fintech, and sustainability.

Now in its third year, the Innovation Challenge attracted over 100 entrants from more than 20 countries, with 14 finalists selected to take part in an intensive 12-week programme. During the process, participants received hands-on support from Isle of Man regulators, government agencies, investors and mentors, using the Island as a live testbed to refine and trial their solutions.

Finalists pitched their innovations at a live showcase on 26 June in front of an expert judging panel and more than 200 attendees. The winners were:

Cleantech: Lnk Technologies (UK) – for their carbon emissions reduction platform, CarbonLnk, which helps businesses optimise energy usage and cut emissions and costs.

Data and AI: Early Ideas by IOM (Isle of Man) – whose AI-powered tool Tandem supports early childhood development with expert-guided, personalised parenting resources.

Fintech: Binderr (Malta) – creators of the world’s first professional and financial services marketplace, designed to streamline compliance, onboarding, and risk management.

Biosphere Award: Big Bower (Isle of Man) – recognised for their AI-powered marketplace that connects brands with sustainable manufacturers and promotes greener supply chains.

The Biosphere Award, presented in partnership with the UK National Commission for UNESCO, highlights solutions that best align with the Isle of Man’s unique UNESCO Biosphere status. Finalists were assessed not only on innovation and feasibility, but also on how well they embraced sustainability and community values.

Winners will now benefit from six months of dedicated support from the Isle of Man’s innovation ecosystem, including mentorship, investor connections, regulatory guidance, and international publicity.

Focus turns to health tech in 2026

Looking ahead, the 2026 Innovation Challenge will turn its focus to Health and Social Care, developed in partnership with the Department of Health and Social Care in the Isle of Man. The new theme will target tech-driven solutions that improve patient outcomes, boost service efficiency, and support frontline healthcare professionals.

Lyle Wraxall, Chief Executive of Digital Isle of Man, said: “Health and Social Care is a natural and exciting evolution for the Innovation Challenge. With a proven model of innovation and cross-government collaboration, we have an opportunity to bring real impact to the areas of public life that need it most.”

Applications for the 2026 challenge will open in November 2025 via innovationiom.com, with global tech innovators encouraged to apply.

The Isle of Man Innovation Challenge is delivered by the Department for Enterprise’s executive agencies – Digital Isle of Man, Finance Isle of Man, and Business Isle of Man – as part of a national strategy to accelerate next-generation technology through real-world trials and public-private collaboration.

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Winners announced at Isle of Man Innovation Challenge 2025

An additional 420,000 pensioners will pay income tax this financial year, bringing the total to 8.7 million, as the combination of rising state pensions and a frozen personal allowance continues to widen the tax net.

Figures from HM Revenue & Customs reveal that retirees are increasingly falling victim to so-called “fiscal drag”, with income tax thresholds frozen since 2021 despite annual increases in the state pension. The personal allowance — the amount a person can earn before paying income tax — has remained at £12,570, while the full new state pension has risen sharply under the triple lock, from £9,332.20 to £11,973 in just four years.

David Brooks, head of policy at the consultancy Broadstone, said the scale of fiscal drag was now “undeniable”: “While the country’s demographic shift naturally increases the number of pensioners liable for income tax, fiscal drag is unequivocally pulling hundreds of thousands more into the income tax bracket each year.”

Although the triple lock was designed to shield pensioners from inflation and the rising cost of living, its effectiveness is increasingly turning into a double-edged sword. By April 2027, the Office for Budget Responsibility expects the full new state pension to exceed the personal allowance, rising to £12,885.50 — £315.50 above the threshold. Pensioners receiving the full amount would then owe 20% tax on the excess, effectively losing £63 annually.

For many, the state pension alone will now bring them close to or beyond the tax threshold — particularly those with additional sources of income, such as private pensions, rental income or dividends. Once that combined income exceeds £12,570, tax kicks in at the basic rate of 20%.

Record numbers now paying higher rates

The pensioner tax hike is part of a broader surge in tax receipts from individuals. More than seven million people are now expected to pay the higher rate of income tax at 40% this year, up from just over 5.1 million in 2022-23. The number of taxpayers in the 45% additional rate band has more than doubled in three years, rising to 1.23 million from 570,000.

Basic-rate taxpayers have also increased, from 28.8 million to 30.8 million, largely because of threshold freezes rather than pay increases alone.

Neela Chauhan, partner at accountancy firm UHY Hacker Young, warned the growing tax burden on higher earners risked economic consequences. “There are real concerns over the impacts of placing an ever higher tax burden on high earners. If pushed too far, it could drive talent overseas or deter skilled individuals from coming to the UK. There are already signs of a ‘brain drain’ developing.”

The Conservatives have pledged to counteract the fiscal drag on pensioners with a so-called “triple lock plus” — which would see the personal allowance for pensioners rise each year in line with the higher of inflation, average earnings or 2.5%, mirroring the triple lock applied to the state pension itself.

Labour has dismissed the proposal as lacking credibility, and it remains unclear whether the Treasury intends to amend the freeze in future budgets. For now, the government’s policy is to keep the income tax thresholds frozen until at least 2028.

The freeze has proven a lucrative strategy for the Treasury, delivering tens of billions in additional revenue without raising tax rates — and without triggering the political scrutiny usually associated with overt tax hikes.

But as more pensioners cross the tax threshold each year, pressure is growing for ministers to intervene or risk an electoral backlash from older voters, a traditionally reliable Conservative base.

The Treasury has been approached for comment.

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420,000 more pensioners dragged into income tax net as threshold freeze bites

Britain’s car and van manufacturing sector has recorded its weakest May for more than seven decades, with output falling by almost a third amid new US tariffs and the ongoing transition to electric vehicle production.

According to the Society of Motor Manufacturers and Traders (SMMT), just 49,810 vehicles were built in the UK last month — the lowest May total since 1949, excluding 2020 when the pandemic shuttered production lines. Total car output dropped 31.5 per cent to 47,723 units, while commercial vehicle production slumped 53.6 per cent to just 2,087.

It marks the fifth consecutive monthly fall in production and takes total output so far in 2025 to 348,226 vehicles — down 12.9 per cent on the same period last year and the lowest year-to-date figure since the early 1950s.

The sharp decline has been attributed in part to the impact of tariffs introduced by the United States in March. President Trump’s administration imposed a supplementary 25 per cent duty on British-made cars, raising total import costs and prompting several UK manufacturers to temporarily halt shipments across the Atlantic.

Shipments to the US plummeted by 55 per cent in May, cutting the American share of UK vehicle exports from 18.2 per cent to 11.3 per cent.

“Trump’s tariffs depressed demand instantly, forcing many manufacturers to stop shipments,” said the SMMT.

Among those hit was Jaguar Land Rover, the UK’s largest automotive employer, which paused exports to America for a month following the tariffs. However, there is hope for a modest recovery following a new UK-US trade deal that allows up to 100,000 vehicles to be exported annually at a reduced 10 per cent tariff — still significantly higher than the pre-tariff 2.5 per cent.

The US slump was not an isolated case. Exports to the European Union — still the UK’s largest single market — dropped by 22.5 per cent, while shipments to China and Turkey fell 11.5 per cent and 51 per cent respectively.

With both domestic and international demand weakening, the overall share of vehicles built in Britain destined for export climbed to 78.5 per cent, as the UK market saw an even sharper fall of 42.1 per cent.

Commercial vehicle production was also hit hard, reflecting the recent closure of the Stellantis-owned Vauxhall van plant in Luton. The historic Bedfordshire facility, which had produced vans for 120 years, was shuttered in March, affecting around 1,200 workers.

Despite the dismal figures, industry leaders are cautiously optimistic about the longer-term outlook.

Mike Hawes, SMMT chief executive, said: “While 2025 has proved to be an incredibly challenging year for UK automotive production, there is the beginning of some optimism for the future. Confirmed trade deals with crucial markets, especially the US, and a more positive relationship with the EU, alongside the government’s new industrial and trade strategies, should help support recovery.”

Much of the recent production disruption has stemmed from retooling efforts to shift towards electric vehicle (EV) manufacturing. While necessary to remain competitive in a global market, the transition has come with short-term production pauses and supply chain challenges.

Aston Martin this week confirmed that it would resume shipments to the US after a three-month pause, thanks to the new UK-US trade deal. However, CEO Adrian Hallmark warned that volatility in trade policy and diverging emissions standards across markets posed a risk to manufacturers’ long-term planning.

The UK automotive industry, once a global manufacturing powerhouse, has faced years of challenges, from Brexit-related trade frictions to the Covid-19 pandemic, semiconductor shortages and now geopolitical tariff disputes.

While the government has pledged support through its newly launched industrial strategy and decarbonisation agenda, manufacturers continue to grapple with rising costs, labour shortages and policy uncertainty — not least around the phasing out of petrol and diesel vehicles.

As output falters and factories like Stellantis in Luton close, the data serves as a stark reminder that the UK’s automotive sector remains highly vulnerable to global trade shocks — and that the road to recovery, and electrification, will not be a smooth ride.

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UK vehicle production slumps to lowest May level since 1949 as tariffs bite

UK and Irish SME leaders are showing signs of cautious optimism despite mounting challenges in international trade, AI adoption and leadership burnout, according to the latest Vistage CEO Confidence Index.

The Index, which tracks sentiment among small and mid-sized business leaders, rose modestly to 89.5 from 87.5 in the first quarter. While resilience remains a defining trait of the sector, the survey of business leaders paints a complex picture: over half (55%) expect higher sales in the year ahead, but only 43% are confident about improving profitability. A further 31% plan to increase fixed investment, though nearly as many (27%) intend to cut back.

Concerns around the UK’s post-Brexit trade position remain widespread. Just 8% of SME leaders believe Britain is becoming a more competitive trading hub, and only 10% are actively pursuing expansion into the EU. Over half say the UK is losing ground to European and global rivals.

Recent efforts to reset trade relations, including the UK-EU youth mobility proposal, have had limited impact on business strategy. While 40% of leaders are reassessing EU opportunities, most have yet to act. Meanwhile, 46% say the youth mobility deal will make little difference to their hiring, and just 5% believe it will meaningfully address talent shortages.

More than a third (34%) of SMEs expect to raise prices in the next quarter, with over half of those planning increases of between 4% and 6%. The move reflects persistent inflationary pressure, as firms look to preserve margins in the face of rising operational costs.

Although interest in AI is rising, implementation is being hampered by a lack of talent and strategic direction. Nearly half (44%) of SMEs say they don’t have the technical skills to deploy AI effectively, and 43% cite the absence of a clear strategy. Resistance to change is another factor: one in four leaders say employee reluctance is slowing adoption of new technologies.

Economic uncertainty is also taking a toll on SME leadership. Almost one in five CEOs rate their work-life balance as poor, while 43% report occasional burnout and 20% say it occurs frequently. Nearly 60% struggle to disconnect during time off — a signal that sustained pressure is weighing heavily on decision-makers.

Rebecca Drew, Managing Director of Vistage UK and Ireland, said: “Our Q2 findings reveal a nuanced landscape for UK SMEs. Leaders are facing geopolitical uncertainty and skills shortages, particularly around AI, but many remain resilient and cautiously optimistic. In a sector where practical peer support and shared learning can shape real outcomes, Vistage continues to see the power of community in helping leaders build forward-looking, competitive businesses.”

Despite the headwinds, the Index shows that UK and Irish SMEs are navigating 2025 with pragmatic optimism. With strategic investments in talent, technology and pricing, many are positioning for long-term resilience — even as broader macroeconomic conditions remain turbulent.

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SMEs cautiously optimistic despite trade fears and AI talent gap, says Vistage

Alibaba has launched a £750,000 innovation competition aimed at small and medium-sized businesses in the UK and across Europe, as part of its drive to support digital entrepreneurship and global trade.

The Co-Create Pitch Awards, which were previously open only to international participants outside Europe, will now invite UK and EU-based SMEs to showcase their product ideas in a contest judged on innovation, market potential and feasibility.

Entrants are encouraged to submit 30-second videos on Instagram or TikTok or register through an online form. The competition will run for up to four months, culminating in live pitches at Alibaba’s flagship Co-Create trade events in Las Vegas and London, where shortlisted companies will present their ideas to a panel of investors and industry experts.

Kuo Zhang, President of Alibaba.com, said: “It’s great to see the entrepreneurial energy and passion SMEs bring to developing their innovative product ideas. This year, we’re thrilled to open this opportunity to entrepreneurs in Europe and the US, and look forward to seeing the product dreams of the brightest SMEs and entrepreneurs coming to life on stage.”

The Las Vegas event has previously attracted over 3,000 guests and 2,000 American SMEs. With its expansion into Europe, Alibaba aims to boost its B2B reach and support growing demand for digital sourcing across global markets.

The grand prize winner will receive a £750,000 business package, with two runners-up receiving £150,000 each. A further 20 ‘global winners’ will be awarded up to £30,000.

The move comes as Alibaba reports a fivefold year-on-year increase in the number of products sold by European suppliers through its platform, reflecting the growing role of SMEs in cross-border trade.

Liz Wang, head of commercial strategy at Alibaba.com, said: “The ‘can-do’ spirit of SMEs has always been the inspiration of Co-Create. Alibaba.com’s global supply chain empowers these businesses to turn their product dreams into reality. From ideation to production, financing to mentorship, we’re here to help them ‘make it.’”

The competition is part of Alibaba’s broader push to position its B2B platform as a key partner for small business growth across global markets.

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Alibaba launches £750,000 pitch competition for UK and European SMEs

Marks & Spencer’s new strawberry and cream sandwich has captured attention on social media — but now it’s caught the eye of tax experts, too.

Marketed as a sweet take on the viral Japanese strawberry sando, M&S’s half-sandwich — part of its meal deal range — is prompting questions over whether it should be classified as a standard sandwich (zero-rated for VAT) or as a confectionery item (subject to 20 per cent VAT).

Wrapped in typical savoury packaging, the new snack consists of sweetened bread and a generous helping of strawberries and cream, mimicking the Japanese original made with soft milk bread. While shoppers are debating the flavour, accountants and barristers are debating its tax status.

“If the bread is sweetened and designed to be eaten with fingers, the case for classifying it as confectionery is surprisingly strong,” said Simon Knivett, VAT manager at HW Fisher. That would make the item subject to VAT under a 1988 change aimed at catching cereal bars and other “sweetened prepared foods”.

The legal uncertainty echoes the now-legendary VAT ruling on Jaffa Cakes, which saw McVitie’s successfully argue the treat was a cake — and therefore zero-rated — not a biscuit. Another similar case is currently unfolding over whether “mega marshmallows” should be taxed as confectionery, with London-based wholesaler Innovative Bites challenging HMRC’s decision to apply the full VAT rate.

Max Schofield, a barrister at Devereux Chambers, said the outcome of that case could have broader implications: “If giant marshmallows, because they’re eaten with fingers and are sweet, fall under confectionery rules, so could sweet sandwiches.”

Adam Craggs, a partner at law firm RPC, added: “The M&S strawberry sandwich may soon join the curious canon of VAT case law. The legislation is notoriously complex and often leads to outcomes that can feel arbitrary or absurd.”

M&S has not commented on whether the item is being sold with or without VAT applied, but with increased popularity — and online debate from VAT professionals — HMRC may soon have a decision to make.

As one tax commentator wryly observed on LinkedIn: “Anyone buying this monstrosity should be charged 100% VAT — just on principle.”

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Sweet or taxable? M&S strawberry sandwich sparks new VAT debate

Padel continues its meteoric rise, with more than 3,200 new clubs built globally in 2024 – the equivalent of one opening every two and a half hours – according to the newly released 2025 Global Padel Report by Playtomic and PwC.

Over 7,000 new courts were added last year, cementing padel’s place as one of the fastest-growing sports worldwide. The report identifies Europe as the sport’s dominant force, but highlights growing momentum in North America, Asia and the Middle East.

The surge comes as padel continues its campaign for Olympic recognition, with an eye on inclusion in the 2032 Brisbane Games. Meanwhile, a “Ryder Cup-style” international competition is set to debut in London this year, signalling further mainstream expansion.

The sport is gaining significant traction in the United States, where Florida, Texas and California are leading the growth, challenging pickleball’s dominance. The report notes that 92 per cent of first-time players return to the court, underlining padel’s wide appeal.

In the UK, participation is surging. The Lawn Tennis Association (LTA) estimates more than 400,000 people played padel at least once in 2024, up from just 15,000 in 2019. Over 75 per cent of UK venues are involved in community outreach initiatives.

Playtomic co-founder Pablo Carro said: “With a new club opening every two and a half hours worldwide, padel has finally joined the top table of the world’s sporting elite. From the rapid momentum in the US to the remarkable social and cultural phenomenon we’re witnessing in the UK, this report proves that padel’s moment has arrived.”

The findings position padel as not just a recreational trend but a sport poised for sustained global integration – both socially and commercially – in the years ahead.

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Padel club boom sees 3,200 venues built in 2024 as global popularity accelerates

Prime Minister Keir Starmer has publicly thanked Britain’s businesses for absorbing the financial burden of his government’s £23 billion national insurance hike, while facing mounting pressure from industry leaders not to impose further tax rises in the autumn.

Speaking at the British Chambers of Commerce (BCC) annual conference, Starmer acknowledged the scale of the demands placed on companies in his first year in office, calling them instrumental in fixing the “foundations of the country”.

“I fully acknowledge that this year, as we’ve had to fix the foundations… we’ve asked a lot of you,” he told delegates. “I want to acknowledge that it has made a huge difference. Because of it, the money has gone into the NHS and waiting lists are coming down. We’ve put investment into the skills… new homes [and] new roads.”

He added: “I want to say thank you.”

Starmer’s remarks are the clearest yet that his government recognises the financial pressure it has placed on employers, following the surprise hike in employer national insurance contributions (NICs), part of a £23bn tax-raising package designed to fund public service investment and deficit reduction.

But his gratitude was quickly met with a firm message from the business community: no more tax hikes.

BCC director general Shevaun Haviland used her speech to urge ministers to hold the line at the next fiscal event, warning that firms cannot continue to shoulder growing cost pressures.

“If there is one message I want government to take away, it is this: there must be no further tax increases at the autumn Budget,” she said. “We cannot keep asking businesses to pick up more of the tax burden.”

In addition to higher NICs, businesses are also grappling with increased minimum wage obligations, continued uncertainty around business rates, and the looming cost of the government’s forthcoming workers’ rights legislation — estimated by some in government to cost firms £5 billion.

While Starmer stopped short of ruling out further tax rises in the autumn, he did attempt to reassure the audience that the government is working to rebalance the economy through growth. He pointed to the government’s newly announced post-Brexit trade strategy as a tool to unlock new international opportunities.

“Trade isn’t just about goods. We’re a services superpower,” he said, highlighting plans to streamline red tape for smaller exporters, expand export credit funding, and improve mutual recognition of UK professional qualifications abroad.

Starmer added that the government would prioritise “faster, smaller” trade deals alongside traditional free trade agreements to speed up market access for UK firms.

Despite Starmer’s warm words and a raft of new initiatives, many in the business community remain wary. Employers are juggling elevated wage bills, inflation-linked input costs, and tightening margins, with little guarantee of policy stability in the months ahead.

The Prime Minister’s speech marks a delicate balancing act: seeking to portray fiscal discipline and investment delivery on the one hand, while trying to maintain the confidence of a private sector still smarting from tax hikes and regulatory uncertainty.

Whether Starmer’s gratitude will translate into lasting goodwill remains to be seen — but the message from business was unambiguous: enough is enough.

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Starmer thanks business for footing tax bill

UK small and medium-sized enterprises (SMEs) are being urged to bolster their cyber defences amid a growing wave of politically motivated attacks, as global tensions and conflicts intensify the threat landscape.

The warning comes after a recent Sky News investigation revealed an increase in cyberattacks linked to the Iran conflict, with businesses across multiple sectors increasingly being targeted. Speaking at the NATO Summit this week, Prime Minister Sir Keir Starmer called on UK companies of all sizes to “take immediate steps to review and strengthen their defences.”

Clinton Groome, CEO of IT services and cybersecurity provider Espria, said the call to action may have come too late for some, warning that businesses can no longer afford to wait for official government alerts before taking proactive steps.

“As tensions spread globally, threat actors will continue to exploit digital vulnerabilities — and neutral businesses make for low-risk, high-impact targets,” Groome said. “This latest warning reinforces the urgency of the threat, but it also highlights a gap in the UK’s cyber readiness. Cybersecurity isn’t just about systems — it’s about people, too.”

Human error still the biggest risk

While companies often focus on technological upgrades, Groome emphasised the importance of addressing the human factor — frequently the weakest link in the security chain. He cited research from BT showing that 39% of UK SMEs — around 2 million businesses — have yet to arrange cybersecurity training for staff.

“Cyber awareness is still vastly under-emphasised,” he said. “Before investing in tools, organisations need to fortify their human firewall. Attackers exploit distraction, fear, and information overload to launch social engineering campaigns. Businesses must ensure their teams are prepared.”

Groome recommends company-wide awareness initiatives, including incident response drills, simulated phishing attacks, and regular reinforcement of cyber hygiene best practices. “The goal is a workforce that’s not only informed but also confident enough to report suspicious activity.”

Beyond employee awareness, Groome pointed to the importance of basic cyber hygiene — including multi-factor authentication (MFA), regular patching, and securing Internet of Things (IoT) devices. He also flagged the upcoming end of support for Windows 10 in October as a critical vulnerability, urging firms to migrate to Windows 11 without delay.

“Threat actors are opportunists,” he said. “The end of Windows 10 support will leave systems unpatched and wide open unless action is taken.”

Groome also stressed the importance of observability and integrated telemetry — the ability to monitor all parts of an organisation’s IT environment in real-time.

“Cyber observability is a team sport. SMEs need to consolidate visibility across endpoints, email, cloud, and identity systems to detect early indicators of compromise, such as anomalous logins or repeated MFA requests. Siloed data can’t protect a business — integrated insight can.”

Given the complexity and cost of deploying advanced security systems, many SMEs may struggle to build these capabilities in-house. Groome recommends that businesses seek support from external experts or managed security providers.

“Layered security is essential, but it can be resource-intensive. Partnerships can help SMEs scale their protection, integrate telemetry, and deliver meaningful training,” he said.

As geopolitical instability continues to drive cyber risk across the private sector, Groome concluded with a message of urgency: “Cybersecurity is no longer a ‘nice-to-have’ — it’s a survival necessity. With the right tools, knowledge, and support, businesses can build the resilience they need to weather the current storm.”

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UK SMEs must strengthen cybersecurity as geopolitical threats escalate, warns Espria

Thousands of small businesses across the UK have expressed alarm at sweeping new Companies House regulations that will require them to disclose sensitive financial data and switch to commercial software to file their accounts.

Under changes set to take effect from April 2027, small and micro businesses will for the first time be required to submit a profit and loss statement as part of their annual accounts — removing long-standing exemptions that previously shielded such firms from disclosing detailed financial information publicly.

In a further shake-up, Companies House confirmed that all limited companies will be required to file their accounts using commercial accounting software, as it phases out its existing web-based and paper-filing systems. The agency said this move is intended to “improve the accuracy and quality of data” and reduce fraud.

But business leaders warned the reforms could add cost, complexity and commercial risk for smaller firms already struggling with inflation and rising tax burdens.

“Small business owners are deeply concerned at this regulatory expansion,” said Martin McTague, national chair of the Federation of Small Businesses (FSB). “It will force those who don’t already use reporting software from big providers to adopt new systems and shoulder the cost and upheaval.”

McTague also raised alarm over the requirement to file profit and loss accounts, which until now had only applied to larger firms. “This opens the door wide to competitors snooping on margins and for large companies in supply chains to scrutinise smaller suppliers’ finances. It could give big players an unfair advantage and damage small firms’ negotiating power.”

The new rules form part of a wider corporate transparency overhaul passed into law last year under the Economic Crime and Corporate Transparency Act. The government and Companies House have been under pressure to improve the integrity of the UK’s business register following a spate of scandals involving shell companies, fraud and the use of limited companies for money laundering.

Companies House said in a statement: “The move to software filing is a critical step in improving the accuracy and quality of data on the register by reducing errors and formatting issues. It will also speed up processing times and help Companies House detect and prevent fraud more effectively.”

However, critics argue that the changes, while well-intentioned, risk penalising law-abiding small companies by removing privacy protections.

Under current rules, small and micro-entity companies can file abridged accounts with limited financial detail — a policy designed to reduce red tape and protect commercial confidentiality. From 2027, abridged accounts will no longer be allowed.

The reforms will also affect the thresholds for audit exemptions and potentially change the accounting reference periods that firms use to file, with more announcements expected “in the coming months,” according to Companies House.

Although a public consultation on transparency reforms was held in 2019, and legislation was passed last year, many small business owners say they were blindsided by the formal notification this week.

“Many directors had no idea this was coming,” said Claire Bennet, an accountant in Nottingham who works with SMEs. “They’re now asking whether they need to switch software, how much it will cost, and what exactly has to be disclosed.”

Companies House said it had written directly to all registered UK companies to give them “plenty of time to prepare” for the changes.

Critics warn the changes may deter would-be entrepreneurs from incorporating a limited company, traditionally one of the most accessible ways to start a small business.

“These changes make the system less friendly for small business owners at a time when the UK desperately needs more enterprise and growth,” McTague said. “Instead of encouraging innovation and start-ups, the government risks making incorporation more onerous and exposing small businesses to unnecessary risk.”

He added that the FSB would be pushing for transitional support, simplified reporting tools, and clarity on how profit disclosures will be used by regulators and third parties.

While business transparency and fraud prevention are widely seen as critical goals, many in the SME sector say the current approach may go too far, too fast — and could have unintended consequences for competitiveness and confidence in the small business ecosystem.

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Small firms raise alarm over Companies House rule change forcing profit disclosure