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One In Five SMEs Forced To Cut Staff As Tax Burden Weighs



Rising tax and cost pressures forced more than one in five (21%) SME bosses to lay off staff last year, according to a survey commissioned by Rathbones, one of the UK’s largest wealth and asset management groups.

 

A targeted poll of more than 1,000 SME founders, owners and senior executives reveals a challenging landscape for business leaders, with cost pressures - including business rates and national insurance contributions - weighing heavily on firms and contributing to redundancies. Nearly six in ten (58%) say rising taxation or regulatory burdens now pose one of the biggest threats to their business, second only to overall rising costs, which are cited by 70% of respondents.

 

With more than one in four SME leaders reporting that over 25% of their personal wealth is tied up in their business, escalating operational costs are increasingly spilling over into their personal finances.

 

This pressure is intensified by a sharply rising personal tax burden, they say. Frozen thresholds continue to push more individuals into higher tax bands, while cuts to capital gains and dividend allowances - combined with higher CGT and dividend tax rates - are further squeezing returns. For many SME owners who take profits via dividends, these changes have materially eroded post tax income and are forcing a rethink of longstanding profit extraction strategies.

 

Faye Church, Senior Financial Planning Director at Rathbones, says:

“We consistently hear from business owner clients across the UK that they are determined to grow, hire and contribute to the wider economy. But heightened tax pressures are increasingly stifling those ambitions. Entrepreneurs are being squeezed from both sides — higher taxes at the business level and rising personal tax bills. This double whammy makes it extremely difficult to plan, invest and build for the future."

 “For most entrepreneurs, the line between business and personal finances is incredibly thin. Tax changes at either level can have an immediate impact on household income, retirement planning and long-term investment goals. That’s why it’s essential to consider business planning and personal financial planning together, rather than in isolation - particularly in a tax environment that is becoming more complex and less predictable.”

 

Other key findings include:

  • Flexible capacity is on the rise: 9% have increased their use of freelancers or contractors, and 9% have shifted towards more parttime or flexible roles.

  • More than three in five SME leaders (62%) believe the government does not understand the needs of entrepreneurs.

  • Demand for targeted relief: Over half (51%) say that measures such as business rates relief or adjustments to employer National Insurance contributions would directly support growth and investment.

 

Hospitality SMEs feeling the sharpest squeeze

The tax and cost burden is proving particularly acute in hospitality. More than 35% of hospitality SMEs say they have been forced to make redundancies - significantly above the overall SME average - while 69% say increased taxation or regulatory burden is now one of the biggest threats to their business.

 

This comes as the sector intensifies its calls for further business rates support. In last year’s Budget, the Chancellor reduced pandemic era business rates relief from 75% to 40%, with the measure due to expire entirely this April. While the government has announced support for pubs, no comparable guarantees have been extended to the wider hospitality industry.

 

Faye Church adds:

“Calls from the hospitality sector for targeted relief highlight the increasingly painful pressures facing these businesses. Without action, the mounting tax and cost burden risks stifling the very growth, innovation and local regeneration the UK economy urgently needs - particularly from a sector that employs so many and contributes so much to communities nationwide.”

 

 





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  • lindaandrews071
  • Mar 20, 2025
  • 2 min read


One of Scotland’s leading hospitality groups, Buzzworks, has launched a major recruitment drive in Edinburgh as it prepares to open its fourth Herringbone venue in the east of Scotland.


Last month, the leading hospitality operator revealed plans to expand the popular bar and restaurant concept to the Barnton area this spring, following on from the success of its sister venues already operating in Abbeyhill, Goldenacre and North Berwick.


The group – which has been named one of the best companies to work for in the UK – is on the lookout for talented individuals to join the team, including front-of-house, kitchen operations and senior chefs.


The venue will be hosting Recruitment Open Days for a range of roles on Thursday 20, Wednesday 26 and Thursday 27 March 2025, from 12pm – 6pm at Herringbone Goldenacre.


Anyone interested in a role at the venue can pop in at their leisure to find out more, with no prior booking necessary.


Ash Bairstow, operations director at Herringbone, said:

“This is an incredibly exciting time for us as we prepare to launch our latest addition to the Herringbone family. We’re all about providing our guests will warm hospitality and seasonally inspired food in a cool, contemporary surrounding, and we can’t wait to meet people who are excited about a career in hospitality to explore the roles we have on offer."

“As well as a whole host of full and part time front-of-house and mid to senior management level positions, we also have a range of exciting opportunities in our kitchen, from entry level to senior roles."


“We would especially urge any talented chefs with a passion for cooking to come along to our open day and learn more about a career with Herringbone and Buzzworks."


“We hope our recruitment events will give anyone who is interested in working at Herringbone a chance to learn more about the roles on offer while providing them a taste of what life at Buzzworks is like. We can’t wait to meet all the potential candidates.”


Buzzworks is renowned for its commitment to its people, offering industry-leading training initiatives including Leadership Development and Management Acceleration Programmes.


Known for its supportive and rewarding work environment, Buzzworks offers competitive rates of pay, flexible working options and a range of benefits, including TRONC – a common fund into which tips and service charges are paid for distribution to the staff.


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