Budget fallout - What do the measure announced on 26th November say about how UK government sees small and micro businesses and entrepreneurs?

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By Liz Barclay

At least we know. After all the speculation we’ve had the budget, and businesses can get on with serving their customers and planning ahead. But the road is tough for many. What do the measure announced on 26th November say about how UK government sees small and micro businesses and entrepreneurs?

The Budget was a mixed bag. It’s the first time I’ve heard ‘start-ups, scale-ups and entrepreneurs’ mentioned in a budget speech. I hoped, coming early in the speech, that signalled good stuff, but while there were targeted reliefs, such as extended business rates support and apprenticeship cost reductions, the overall package delivered higher wage bills, dividend tax hikes, and compliance burdens. Government says small businesses are the backbone of our economy and vital to society but prioritising fiscal consolidation and worker protections over entrepreneurial growth doesn’t leave small business owners feeling recognised and appreciated. We know the Chancellor had to balance feeble growth forecasts, stubborn inflation, and a challenging fiscal gap but support for the UK’s entrepreneurial backbone could make the job a lot easier.

The biggest measure was the rise in the National Minimum and Living Wage from April 2026 (£12.71/hour for 21 and over, £10.85 for 18–20 year olds will earn £10.85/hour, and £8 an hour for apprentices and under‑18s. The Living Wage raises pay to £13.45/hour outside London and £14.80/hour in London).

Business owners want to pay fairly. For small businesses in hospitality, retail, or care, higher wages may improve recruitment and retention but the increases will squeeze margins already under pressure. One distraught entrepreneur told me he’d planned to take on 5 people before the April 2025 increases. Now he’s expecting another huge payroll increase in April 2026. That’s a few more jobs he’s no longer planning to create.

All the businesspeople I know think their people deserve more but they want to do that by growing the business so they can afford to increase wages. There’s also the knock-on impact. If colleagues are getting wage increases everyone else in the workplace wants and deserves recognition too and it all pushes the national insurance bill ever higher. Can businesses absorb the increasing costs, or do they have to raise their prices while risking losing customers who can no longer afford their products or services?

The Budget confirmed a 2% increase in dividend tax rates from April 2026. For small business owners who pay themselves via dividends, that’s less take‑home income. Combined with corporation tax, it reinforces the sense of “double taxation” on entrepreneurial spirit. I know quite a few businesspeople who can no longer afford to pay themselves at all. Their income is going down while the risks of being innovative and entrepreneurial are becoming too onerous. There’s quiet closing going on and unemployment is rising.

The budget also brought property tax increases, savings income tax rises and a £2,000 cap on salary‑sacrifice pension contributions.

The good news is:

Lower business rates for over 750,000 retail, hospitality, and leisure properties, worth nearly £900m a year from April 2026.

A £4.3bn support package will cap bill increases for those hit hardest by revaluations. This should protect some independent pubs, shops, and cafés.

Apprenticeships will be more affordable and potentially boost youth employment.

The Enterprise Management Incentive (EMI) scheme will be expanded from April 2026, to cover firms with up to 500 employees and £120m in assets allowing more ambitious businesses to retain talent through tax‑advantaged share options.

Fuel duty is frozen until September 2026, helping logistics and deliveries.

Train fares are frozen until March 2027 helping commuting employees.

There’s also a consultation on making tax incentives more “founder‑friendly,” recognising that entrepreneurs need tailored support to start, scale, and stay in the UK. However, that’s where the sweeteners end. Even extending the sugar tax to mass‑produced milkshakes and lattes, will cause some firms sleepless nights and the 3 pence per mile tax on electrical vehicles wasn’t factored into anyone’s careful financial forecasts when they decided that buying an EV would be worth it.

I feel the budget paints a picture of a government that values small businesses as employers and community stalwarts, but wants them primarily to deliver worker protection and revenue rather than to be encouraged to invest. Wage rises, dividend tax hikes, and compliance measures dominate, while reliefs are targeted narrowly at high street firms and apprenticeships.

The expansion of EMI and consultation on founder‑friendly tax incentives may be positive signals but policymakers need to balance worker protections with genuine support for the risk‑takers who create those jobs, innovate and build resilience across the economy. There’s still a long way to go.