Nearly two thirds of SMEs see tax as biggest challenge

By Hamish Graham

Published: 27 February, 2025

Data from the British Chambers of Commerce (BCC) can reveal that 63% of small and medium enterprises (SMEs) saw taxation as their primary business challenge. The data, which was gathered following the Autumn Budget, represents an increase compared to Q3 of 2024 when 48% of business owners saw it as their primary challenge.

The most significant concern regarding tax is likely to be the increase in employer National Insurance contributions (NICs) due to be introduced from 6 April 2025. The changes include an increase in the rate of employer NICs from 13.8% to 15%, as well as a reduction in the threshold for employer NICs down from £9,100 to those earning £5,000 per year.

These challenges could have a particularly profound impact on hospitality as many of the trade’s workers fall within this income band, thanks in part to the importance of part-time employment in the trade.

Read more: Hospitality suffers sales drop for January

The tax rise could also force some businesses to raise prices, squeeze profit margins and delay investment, as well as curtail hiring efforts.

Changes to taxation policy come at a time when SMEs, including those in hospitality, face difficulties due to other economic headwinds. The BCC’s quartely economic survey revealed that for Q4 2024, only 32% of SMEs reported an increase in domestic sales during the quarter, down from 35% in Q3 2024.

These combined challenges mean that in Q4 2024, 55% of SMEs surveyed believed they would have to increase their prices, up from 39% in Q3 2024.

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