Reeves’ tax plans to push one in eight businesses overseas
One in eight small and medium-sized enterprise (SME) leaders in the UK are actively planning to relocate themselves, their businesses, or both, citing the current tax burden.
This amounts to roughly 680,000 businesses out of the UK’s 5.67m SMEs, according to a new report by Rathbones.
The findings come just weeks ahead of Rachel Reeves’ Autumn Budget, adding to pressure on the government to address business confidence amid rising taxation and regulatory costs.
Rathbone’s report found that, among those planning to leave, a third are considering moving their companies abroad, with Ireland, Dubai, and the US topping the list of destinations.
And what’s more, a further 26 per cent of SME leaders say they are concerned about the tax environment even if they are not planning to relocate.
Tax concerns weigh heavily on SMEs
The survey also highlights broader dissatisfaction with government policy. Nearly two-thirds of SMEs believe the government does not do enough to encourage business growth, and more than two in five consider current policies unsupportive.
Tax changes and rising employment costs, including increases to employers’ national insurance and the national living wage, were cited as key factors affecting business operations.
Ade Babatunde, senior financial planning director at Rathbones, said: “SMEs are the backbone of the UK economy, and the fact that many are considering leaving because of taxation is deeply concerning. Their departure would mean the loss of valuable jobs and tax revenue, at a time when the government is trying to boost growth.”
Meanwhile, the British Chambers of Commerce has reported that small exporters are struggling to navigate post-Brexit trade rules, with flat or falling export orders leaving many firms financially vulnerable.
Begbies Traynor recently flagged a sharp rise in SMEs in critical financial distress, particularly in consumer-facing sectors.
Small businesses are also particularly bracing for potential changes in income tax, capital gains tax, and business rates in Reeves’ anticipated Budget.
Previous tax hikes, including last year’s increases to capital gains tax and employer national insurance, have already led many entrepreneurs to pause hiring or reduce headcount.
With SMEs employing 60 per cent of the UK workforce and making up 99 per cent of private sector firms, experts warn that continued fiscal pressure on smaller businesses could have knock-on effects for jobs, investment, and long-term economic growth.
“The government needs to offer more targeted support for SMEs, whether through tax relief or policies that incentivise growth and risk-taking,” Babatunde added.
“Otherwise, we risk seeing a significant exodus of talent and businesses at a time when the economy can least afford it.”