Autumn Budget 2024: What small business owners think

Chancellor Rachel Reeves has delivered the new Labour government's first Budget, one of the most significant financial statements in years.

In a speech that unveiled £40bn of tax increases, a headline was an increase in Employers' National Insurance contributions which the Treasury expects to raise £25bn. Read a guide to all the small business announcements here.

We asked some business owners for their reaction. Here's what they told us.

Mike Turner, co-founder, Bird & Blend Tea Co, a retailer with 22 high street stores:

"This National Insurance rise is a significant increase, adding 38% to what we will pay as an employer but to say that it won't hit payslips is dishonest.

The National Insurance thresholds are going to be painful for our business, yes - but it will also impact my team's payslips. Total cost feeds into pay rise calculations, so future raises will be lower as a result. For team members in hourly roles, the hours available will be lower.

"All of this leads to team members earning less and that's not fair - they don't even get to see the contribution that they are making.

"These costs also feed into our pricing plan and growth strategy, everything. We were planning to open several more shops next year and this will impact how possible that is and the level of staff we can employ."

Sarah Hodgkins, founder, Charlotte Designs:

Some small businesses being exempt from the employers' National Insurance increase is a good thing. I think the increase is bad overall and will have a negative effect ultimately.

"The hike in Capital Gains Tax is not good. My husband and I have worked hard our whole lives to invest and save for our retirement. this feels like a kick in the teeth).

"Pension pots being part of the estate is also not good. The reality of that is that we will spend all our money and not leave it to the kids!

"I'm delighted that the tax on vapes and tobacco are being increased. It should have been more.

"I'm also delighted there is not an increase in fuel duty. As a rural based business owner who has no choice but to run a commercial vehicle, that has a significant impact on my costings."

Campbell Murray, founder, SouqBox:

"The National Insurance insurance increase is a tax on jobs, coupled with increasing employee rights and the costs that bears on employers. I can't see how the government think this is anything else. It's about £600 per employee more.

"Apart from the impact on job creation, this will likely impact on inflation as every employer in the country will seek to recover this and that will wash through into consumer pricing. Every employer who has the option to hire offshore (my industry being a case in point) has just been given the encouragement to do so by this job destruction policy.

Apart from the fact that Labour's manifesto said they wouldn't raise National Insurance and they have (it's pointless trying to separate NI between employee and employer) and the obvious debate around breaching or misleading in the manifeso, this entire Budget could be described as the least business friendly since the 1970s.

"The prime minister continuously claims that Labour is a party for business. I can't see a single policy today about the £600 per employee more. Apart from the impact on job creation, this will likely impact on inflation as every employer in the country will seek to recover this and that will wash through into consumer pricing. Every employer who has the option to hire offshore (my industry being a case in point) has just been given the encouragement to do so by this job destruction policy."

Elsie Ruttherford, co-founder, BYBI Beauty:

"The rumours surrounding Capital Gains Tax meant we were poised for a more dramatic hike, so although it's not ideal it's slightly better than expected! Ultimately our fear was that changes to CGT, Business Asset Disposal Relief and employers' National Insurance could hinder growth and reduce the quantity of startups created in the UK altogether and this could still be a reality we face.

"We can speak first hand to the challenges faced starting and scaling a business in the UK. For entrepreneurs that have managed to weather the impact of both Brexit and a global pandemic, we hope that the changes reflected today don't place further obstacles to running costs and the potential to earn.

"We recognise changes must be made to secure the future of the UK's economy and hope now that taxing in these areas does not have a longer term damaging effect where the net result is a demise of the start-up. The UK is a hub for innovation and entrepreneurship and we hope that the Labour government continue to invest into the start-up environment in other ways to ensure this continues to be the case."

Amelia Peckham, founder, Cool Crutches:

"The Budget is going to have a significant cost and risk impact on small businesses and entrepreneurs which is not only going to put pressure on an already stressed community but more crucially for the wider economy, it's going to directly reduce the sale of small businesses which in turn will also impact the speed at which they scale.

"Increasing minimum wage means a direct loss of margin and increase in running costs for entrepreneurs who often rely on cheaper labour whilst they grow. It will also likely push entrepreneurs to hang on longer before they employ people due to cost implications or hire less staff. This will mean less growth, less jobs provided by small businesses and a harder situation for both employees and employers.

"Employers' National Insurance contributions increasing by 1.2 percentage points to 15% as well as lowering the threshold for businesses to start paying NI to £5,000 means founders like me will likely resort to freelancers over employees. This isn't good news. To grow we need teams that grow with us but with such a cost implication in tax, it's not efficient to hire employees; it is in fact a bigger risk for us.

"The overall impact being reduced hiring (ironic when the government claim they're trying to grow the economy and reduce unemployment) but also likely cost cutting measures to counteract the increased employer costs. Whichever way you look at it, it's going to stunt growth.

"Finally, the biggest one is entrepreneur's relief [Business Asset Disposal Relief]. Pushing this up is frankly moronic. We know how much small businesses fuel the economy and to continue to grow we need to support growth, scaling and exit plans.

"Momentum to do this will be stalled due to the increased tax. This will cripple small businesses and their plans to grow. Why would we throw the kitchen sink at building our businesses if the reward at the exit point is a whopping tax bill?

"The reality is people will move their businesses abroad to sell, injecting overseas economies with value, not the UK. Either that or they will extend their scaling timelines so they sell in five-10 years, not the next five. I will absolutely be looking at what we can do to scale over the next five years with a view to exit later as a direct result of this.

"I will also look at how we hire from now on to structure with a heavier weight on freelancers than employees to retain efficiency but also protect margins and keep costs under control. Let's just hope people's businesses will no longer be valued based on how many employees they have, because you can bet your bottom dollar that's going to decrease across the board as a result of this Budget!

"This Budget is not designed to support entrepreneurs. It goes directly against that and looks to be actively penalising them which will also further pressurise the idea and reality of running your own business."

Olly Tyler, owner, Shroot:

"My initial reaction is that this is a reasonably manageable Budget for us as a small, manufacturing-based employer, particularly with the boost to the Employment Allowance. However, I can see this being challenging for retail and entertainment businesses with larger workforces. 

"The reduction in business rates relief will significantly impact some, potentially doubling bills, while the changes to the National Minimum Wage and Employer NIC rate and threshold mean that even minimum wage roles will cost around 10% more. My main concern isn’t for chains or big brands but rather for local businesses - soft play centres, larger independent shops, amusement parks - that will likely feel the squeeze from these new costs." 

Alison Davies, co-founder, Carlisle Brewing Co:

"To be fair, for our size of business I'm not too horrified by the Budget. The beer duty reduction was a surprise, and the freeze on fuel is helpful.

"We're not affected by much else to be honest although the business rates will have some effect and the rise in minimum wage and employers NI may have a huge impact on hospitality in general, which will obviously have a knock on effect for our small brewery."

Ameesha Gree, founder, The Book Shelf:

"We are a small business operating in a sector that is difficult to access for young people, and so we strive to reduce barriers and make our industry more accessible. Unfortunately, this is made more difficult by the prohibitive costs of hiring people as employees, and the rise in National Insurance along with lowering the payment threshold will make it even more expensive for businesses like us to employ people.

"We are already a Living Wage accredited company and so rises in minimum wage will not affect us, however, overall we feel that there has been little recognition of the enormous challenge and risk that working class people like ourselves have taken on to start a company and offer opportunities to others."

Ruth Finnan, co-CEO, Circle Scotland CIC:

"We are a service company and our biggest expense is staff salaries. We will now pay a higher percentage of NI on employee salaries, with some part time workers now falling into the NI threshold, directly raising labour costs. The rise in the employment allowance does not offset the increase in NI from dropping the threshold.

"Our already tight margins will be squeezed unless we can offset these costs. Our cash flow projections and strategy for 2025 will now have to be re ooked at, and salary increases will potentially now not be possible.

"Increasing costs on small employers to fund public sector workers wages will result in the pay deficit between public sector and the third sector employees becoming wider.

"The majority of our service users are third sector businesses who will also be experiencing similar issues and we cannot expect them to pay for this through price increases."

Joanne Baldock, managing director, Role Play Lane:

"Higher National Insurance contributions mean higher costs for not-for-profits with employees. The increased expenses will likely reduce funds available for direct community services, potentially limiting programme and support for families in need.

"As a smaller not-for-profit, we will struggle with absorbing these costs compared to larger charities with more diversified funding streams. We all work for minimum wage, including me as a managing director, so there is no wiggle room for us unfortunately.

"Increased worker rights will create administrative and financial challenges for small organisations like ours with limited HR resources. We do everything ourselves as there is no money to outsource so this would make everything more challenging. Although I agree that employees have certain rights, where is the help for small business owners/managers who do everything in the business?

"Increase business rates will impact our future and feasibility as a not-for-profit and how we are able to continue to support the community."

Martha Keith, founder, Martha Brook

"This Budget feels like a missed opportunity from an SME perspective. I can't see anything that indicates this government believes small businesses are important for the economy and for growth."