Small businesses in London fear April tax rises

A business group has warned that many small to medium businesses (SMEs) in London will struggle to survive because of new tax changes that come into force in April.

The London Chamber of Commerce and Industry (LCCI) surveyed 150 firms in the capital and found around two-thirds of them were going to scrap or lower pay increases and stop hiring new staff in order to stay afloat.

It also found that firms were also considering cutting bonuses and almost one in five were even looking to leave the UK entirely.

The Treasury has said it has "achieved a great deal in a short period of time" including measures protecting "the smallest businesses".

Chief executive of the LCCI Karim Fatehi MBE said: "I would ask the government to review the decision especially on employer national insurance and provide the platform for businesses to grow."

Sarah Guntrip runs Scotts Butchers in Carsharlton, which has been in the family for 100 years.

The business has already started to close half an hour early to save on electricity and staffing costs.

Sarah is worried about what further changes in April might mean.

"It's going to hit us dramatically," said Sarah.

"With staff wages going up it's going to have a massive impact. We are going to not be able to employ new staff."

She added: "We are going to have to take it day by day.

"It's going to mean prices going up, and they're going to go on to the customer.

"Obviously we are going to be careful as we have loyal customers.''

Sarah wants the government to provide more support.

"Anything to help the small business would be helpful, especially regarding electricity. I feel they are helping employees more than employers."

Adrian Knapik has run his removal company with his dad and brother for nine years.

Adrian has seen a rise in demand as people try desperately to avoid the stamp duty threshold changes in April.

He also increased his prices by 10% in January in anticipation of the changes in the new tax year.

He said: "The minimum wage rise, plus taxes for the vans and insurance, it's going to cost £3,000 extra for the year.

"It's a small business, so it's a lot of money. We're trying to only spend money on what we need - and we need employers.

"The customers aren't happy everything is increasing. It's a circle."

Oumesh Saube has run his accountancy firm in Croydon since 2008, which has three employees.

His customers are worried about what the tax rises might mean.

"We know customers - like restaurants - who will start losing their profit margin," said Oumesh.

"A lot of people are very concerned.

"Their main concern is the employer national insurance. The government has increased the benefit for small employers but it's interesting to see how that will work in real time."

It could also impact his own business.

He said: "We might not recruit more than we should. It's going to be tricky if we don't have the staff.

"For me as a business owner, I don't get sick pay, or holiday pay. I don't get minimum wage, but I'm still taxed the same way as somebody who is PAYE which doesn't make sense.

"There is no benefit tax-wise to be a business owner now."

Eighty-six percent of those who took part in the survey were small to medium-sized enterprises (SMEs).

When asked what their main challenges would be from April they said:

• 67% said they were having to lower or scrap pay increases/bonuses for staff
• 63% are predicting a hiring freeze
• 18% are looking at leaving the UK entirely.

The study also found that businesses were most worried about employer National Insurance increases and lower National Insurance thresholds in 2025 with 81% predicting that the increases will be negative or very negative for their firm.

Among the other top five concerns were increases in capital gains tax, reduced business rate relief and stamp duty bonds.

A Treasury spokesperson said: "We know the vital importance of small businesses to our economy.

"We have already achieved a great deal in a short period of time, including protecting the smallest businesses from the employer National Insurance rise and late payments, and capping corporation tax.

"We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets."

Listen to the best of BBC Radio London on Sounds and follow BBC London on Facebook, X and Instagram. Send your story ideas to [email protected]