Feeling the pressure

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Small businesses are facing a tough start to 2026 as confidence slumps and growth plans stay out of reach, new research by the Federation of Small Businesses (FSB) has revealed.

The organisation’s Small Business Index (SBI) plunged to -71 in the final quarter of 2025, meaning far more businesses were struggling than succeeding.

This is down from -58 in Q3 and the lowest it’s been since the outbreak of Covid in 2020, when it dropped to -143.

The hospitality, accommodation and food sector is the worst hit, recording a confidence score of -104 – with 46 per cent of those small firms planning to decrease staff between January and March 2026, and 58 per cent expecting a decrease in revenues.

Small firms with staff are bearing the brunt – with those employing between 1-9 people recording a dire confidence score of -85.

Taxation is a major cost pressure – cited by a record 64 per cent of respondents, up from 62 per cent last quarter.

Tax first topped the list in Q2 2025 – the first time this has happened in the SBI’s history – and has stayed there ever since, showing how policy decisions are now landing directly on small business growth plans, with dividend tax rises still to come.

Comparatively, in this quarter’s survey, labour costs worried 56 per cent of businesses and utilities concerned 47 per cent.

With revenues falling and costs rising, investment plans have inevitably stalled, with 37 per cent planning to reduce investment levels next quarter, compared to just 13 per cent planning to increase.

Meanwhile, 26 per cent of small businesses reduced their workforce in Q4, five times as many as increased it.

Looking ahead, expectations for the next quarter are similarly bleak, with 23 per cent of firms planning to cut staff in the coming quarter.

These reductions are most pronounced in businesses with 10 to 49 employees, where 51 per cent reduced headcount in the last quarter.

Tina McKenzie, FSB Policy Chair, says: “The human cost of these numbers is devastating. Small business owners who have spent years building something stable are now being forced to make painful decisions, putting growth on hold simply to stay afloat.

“When a record 64 per cent of firms say taxation is their biggest cost pressure, higher than labour or energy, it points to a system that is making employment and investment increasingly difficult to sustain. They’re being squeezed by policy choices that have made growth unaffordable.

“What’s particularly alarming is that businesses with staff are being hit the hardest. The very firms that create jobs, train people and drive local economies are seeing their confidence crater to -85 – that’s not sustainable and is why we’re seeing so many firms reducing headcount.

“There are clear steps that would help alleviate some of these issues – an urgent rethink on business rates, addressing the soaring standing charges for energy, raising the Employment Allowance and introducing an SSP rebate.

“We need to see urgent action on these in the Spring Forecast and the upcoming King’s Speech.

“Small businesses always show remarkable resilience in times like these, adapting time and time again in the face of sustained pressure, but resilience alone cannot offset policies that keep pushing costs higher.”

• To discuss any issues raised by this article please contact me on 01772 430000

Government bailout for pubs

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Every pub in England will get 15 per cent off its business rates bill from April as the government moves to support the struggling hospitality sector.

Their bills will then be frozen in real terms for a further two years. Treasury minister Dan Tomlinson told the Commons: “This support is worth £1,650 for the average pub, just next year.”

He added: “It mean that around three-quarters of pubs will see their bills either fall or stay the same next year.”

The valuation model used for pubs will also be reassessed. Mr Tomlinson said pubs had not had the support they have needed “for too long”.

The support package has been welcomed but there remain strong calls for more to be done to help the wider hospitality industry.

Announcing the moves, the minister said: “This government does want to go further to support pubs. Pubs are the cornerstone of so many communities, they are essential to the social and cultural life of so many places across the country.”

This support will also apply to music venues, Mr Tomlinson added. “Many live music venues are valued as pubs and many pubs are grassroots live music venues. It would not be right to seek to draw the line so tightly so as to include some and not others.”

The government’s move came after increasing concerns over its plans to overhaul business rates.

They left many venues facing an increase in their business rates bills from April. This was because, although the government lowered the multipliers – a figure used to work out how much businesses pay in rates – many pubs, restaurants and hotels had their properties revalued, and the new values were often much higher.

Trade bodies had warned that chancellor Rachel Reeves’s changes to business rates, announced in her November Budget, would trigger widespread closures and job losses in the hospitality sector, particularly in pubs.

With costs mounting and margins tightening, they predicted closures would intensify, stripping communities of essential social hubs and wiping out thousands of jobs.

UK Hospitality, the body which represents the wider sector, said the measures announced by Mr Tomlinson “address an acute challenge facing pubs”.

However, Kate Nicholls, who chairs the organisation, warned: “The rising cost of doing business and business rates increases is a hospitality-wide problem that needs a hospitality-wide solution. The Government’s immediate review of hospitality valuations going forward is clear recognition of this.

“The devil will be in the detail, but we need to see pace and urgency to deliver the reform desperately needed to reduce hospitality’s tax burden, drive demand, and protect jobs and growth. We will work with the government over the next six months to hold their feet to the fire to deliver this.

“This emergency announcement to provide additional funding is helpful to address an acute challenge facing pubs.”

She added: “The reality remains that we still have restaurants and hotels facing severe challenges from successive Budgets. They need to see substantive solutions that genuinely reduce their costs.

“Without that clear action, they will face increasingly tough decisions on business viability, jobs and prices for consumers. Those are costs borne by us all, and I hope the government delivers on its promise to support the whole hospitality sector.”

The British Beer and Pub Association (BBPA) said it would “stave off the immediate financial threat posed by accelerating business costs and will help keep the doors open for many”.

Its chief executive Emma McClarkin said landlords across the country would “breathe a sigh of relief” but added the organisation’s focus was now on long-term reforms to business rates.

The government also announced that it will consult on loosening planning rules to help pubs, which could mean they will be able to add guest rooms or expand without planning applications.

Mr Tomlinson said: “We will also continue to engage with the sector to ensure that other retail, leisure and hospitality premises have flexibility.”

• To discuss any issues raised by this article please call me on 01772 430000

Inheritance tax continues to climb – how sound is your estate planning?

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Inheritance Tax (IHT) receipts hit £5.8billion in the first eight months of the 2025/26 tax year.

That figure, revealed by HM Revenue & Customs (HMRC)m is £84m higher than the same period 12 months earlier.

And it continues a steady upward trend that has been witnessed for more than 20 years – a rise that looks set to continue.

The Office for Budget Responsibility has forecast that IHT will raise £9.bn in the current 2025/26 tax year. And there are predictions from some experts that it will hit £14.5bn by the end of the decade.

For one thing, the chancellor’s freezing of the nil-rate band until 2031 will lead to more and more families being left with a tax bill.

Pensions have also been caught in the IHT net. From April next year, unspent pension pots will be brought within the scope of inheritance tax, removing their long-standing role as a planning tool.

IHT can apply to certain lifetime transfers and gifts and also on the value of an individual’s estate at the time of death.

The IHT nil rate band is £325,000, with an additional £175,000 ‘residence nil rate band’ available in some cases for leaving the family home to direct descendants.

For any value remaining after the nil rate bands and IHT reliefs and exemptions, the maximum rate of IHT remains at 40 per cent.

The residence nil rate band will also remain frozen at £175,000 until 2031.

There is some positive news. In December the government announced that the level of the Agricultural and Business Property Reliefs threshold will be increased from £1m to £2.5m when it is introduced in April this year.

This allows spouses or civil partners to pass on up to £5m in qualifying agricultural or business assets between them before paying inheritance tax, on top of existing allowances.

The government says it has listened to concerns of the farming community and businesses about the reforms announced in the 2024 Budget.

And it adds that raising the threshold will significantly reduce the number of farms and business owners facing higher IHT bills under the reforms, ensuring that only the largest estates are affected.

There is no time like the present to turn your attention to estate planning. We can work with you to ensure your plan is up to date and that it is fit for purpose.

It should meet all your wishes when it comes to the distribution of your assets through your family. Careful planning and a pro-active approach is critical.

• To discuss estate planning or any issue raised by this article please contact me on 01772 430000

On a real growth journey

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The growth of Lancashire’s scaleup sector has been described as one of the county’s real economic success stories over the past decade – with no signs of its momentum slowing.

Figures show the county outperforming some big city economic powerhouses when it comes to scaleup businesses and the potential for further growth.

Recent research has shown county’s scaleup growth is higher than areas such as Liverpool City Region, the West Midlands and Glasgow.

However, it is the past five years where the Lancashire scaleup community has really thrived.

The 2025 Annual Scaleup Review showed 970 scaleup firms in Lancashire – businesses consistently growing at 15 to 20 per cent per year – compared with 705 in the 2020 report, an increase of almost 38 per cent.

That growth is supported by the strong support ecosystem that exists locally including Two Zero, operated by the county council. The service has supported 143 scaleups since 2020 with dedicated help to tackle key challenges.

Amin Vepari, business finance and scaleup lead, Lancashire County Council said: “The impact scaleups have on the UK’s overall economic performance is again clear to see in the latest Scaleup Annual Review.

“Despite accounting for 0.8 per cent of the business population, scaleups contribute £2.19 trillion to the UK economy, around 50 per cent of total economic output, up from £1.4trn in the previous year’s report.

The Scaleup Annual Review also assessed the key barriers to scaleup growth across the UK.

The biggest challenge for respondents to the Scaleup Institute’s p survey was access to UK and international markets, cited by 58 per cent of respondents.

Following this was talent and leadership development (55 per cent) and access to bank and equity finance (42 per cent).

• To discuss any issues raised by this article and how we can support your business’ growth plans please call me on 01772 430000

SpudBros: From Preston’s Flag Market to global fame

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From humble beginnings on Preston’s Flag Market to a global phenomenon – The SpudBros’ remarkable growth story continues.

Jacob and Harley Nelson have turned their jacket potato business, operating from an old tram carriage in the city centre, into a worldwide social media sensation.

And on the way the brothers have become proud sponsors of Preston North End, opened outlets in London and Liverpool and have plans to create multiple franchises across the UK.

Millions of people have watched their videos from the city centre tram, with people coming from all corners of the world and queuing for hours to sample their spuds.

SpudBros now boasts nearly five million TikTok followers and more than eight million followers worldwide on all their socials. These are staggering numbers.

The business has also made national and international headlines with journalists and film crews attracted to their remarkable story.

As another proud Preston-based business, WNJ is playing its role in this continuing success story as the SpudBros’ accountants and business advisors.

Their father Tony Nelson, aka ‘The Spudfather’, says: “As the business has grown rapidly over the last 18 months, we’ve benefited greatly from WNJ’s support and its sound advice.

“It’s not just about the accounts and figures. We have built a close relationship with Michael Barker and the WNJ team. They are trusted advisors who we can talk to and get valuable feedback from and that’s important and what we need as the business continues to expand.”

The sale of hot potatoes on the Flag Market can be traced back to 1955 when Ernie Rhodes set up his hot potato cart before eventually it was passed on to Keith Roberts.

His son Keith junior, a legendary figure in the city, followed in his father’s footsteps.

Following his untimely death in 2020, at the age of just 43, family friend Tony and his son Harley bought the tram and took the business on. Things really took off when Jacob, 29, joined them, and the social media side exploded, with amazing results.

The SpudBros have taken the humble jacket potato, put their own twist on it and elevated it to new levels through the toppings they offer to customers who flock to the tram.

Headline-making initiatives have included an event on The Flag Market where they gave away over 1,000 free spuds funded by social media superstar Mr Beast.

And this season, following a sponsorship deal with the Championship club, the SpudBros logo now sits proudly on the shirts of Preston North End players.

There are also a number of shops appearing on the High Street. These are operated under the ‘SpudBros Express’ brand, which is owned and operated by food company Taster.

An exclusive licensing agreement has granted Taster the rights to use the SpudBros name. Further down the line there are overseas targets too.

Tony says: “Things have developed so quickly and it really shows the power of social media. I don’t really get it but the boys do, they really understand it and how to use it to drive momentum.

“We’re just exploring all these opportunities at the moment and just seeing where that takes us. It’s exciting times.”

Closer to home, the SpudBros new-look tram is about to make its appearance on the Flag Market.

The business won planning permission this summer for the new shopping-container design which is set to become a city centre landmark and attract even more interest from their global fanbase.

• To discuss how we can support your business on its growth journey contact us on 01772 43000

Difficult choices ahead for the chancellor

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CHANCELLOR Rachel Reeves has warned the government is facing difficult choices as the clock counts down to her Autumn Budget.

In her keynote speech at Labour’s annual party conference in Liverpool she pledged to keep “taxes, inflation and interest rates as low as possible”.

However, there was also a hint that further tax rises may be ahead when she delivers her Budget in November.

The chancellor told the conference the government’s choices had been made “harder” by international events and the “long-term damage” done to the economy.

Economists believe she faces a choice of hiking taxes or cutting spending – if she is to meet her self-imposed fiscal rules. If she chooses the first option, the question remains where she will target the increases.

The rise in employers’ National Insurance Contributions (NICs) she announced in her 2024 autumn budged has had the biggest impact on small businesses.

The boss of Tesco has also warned the government against adding extra costs to UK retailers in the upcoming Budget, saying “enough is enough”.

Ken Murphy said he did not want to see a repeat of the last Budget, when “the industry incurred substantial additional operating costs”.

In her speech Ms Reeves told her audience that she would not take risks with public finances and stressed her commitment to “economic responsibility”.

The chancellor said: “We will face further tests, with choices to come made all the harder by harsh global headwinds and long-term damage to the economy, which is becoming ever clearer.”

In a wide-ranging speech Ms Reeves also vowed to abolish long-term youth unemployment and to invest in British industry. She also urged people to “have faith” in Labour’s agenda.

The chancellor confirmed that every eligible young person who has been on Universal Credit for 18 months without earning or learning will be offered guaranteed paid work through a new ‘Youth Guarantee’.

The new initiative aims to build upon existing employment support and sector-based work academies currently being delivered by the Department for Work and Pensions. The scheme forms part of the government’s aim to provide targeted support for young people at risk of long-term unemployment. 

Responding to the jobs guarantee announcement, policy chair of the Federation of Small Businesses (FSB), Tina McKenzie, said: “This is a hugely important announcement – offering thousands of young people a crucial chance in life.

“Reprioritising spending from employment programmes which aren’t working to this type of scheme is exactly the way to get much-needed bang for taxpayer cash.

“It is a welcome commitment that – done right – will help small businesses do what they do best, provide jobs in our local communities, and help those who need it most get into work.

“Key to getting the details right is making sure there is a backstop offer to those who are now over-25, particularly those with health challenges; that young people out of work for health reasons are not excluded through misguided double funding rules; and that small businesses are enabled to play a full role in the delivery of the scheme.

“We look forward to working with the Treasury to get the important details of this announcement right, and we hope it heralds a pro-jobs, pro-self-employment, pro-business, pro-growth Budget in two months’ time.”

Changes spark steep fall in SME R&D tax credit claims

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The number of SMEs claiming research and development (R&D) tax credits fell by nearly a third in 2023-24, according to newly published figures.

A report from HM Revenue & Customs (HMRC) reveals that the overall number of claims by businesses fell by 26 per cent to the lowest figure in nearly a decade – with a 31 per cent drop when it came to SMEs.

These are the first statistics affected by the change in relief rates for the SME and R&D expenditure credit (RDEC) schemes.

The period is also the first full tax year where all claims had to be supported by an additional information form, one of the administrative changes the HMRC says were introduced “in order to improve levels of compliance”.

The figures reveal a bigger drop in the number of claims for up to £15,000 of tax relief compared to larger ones of above £250,000. First-time claims from SMEs also plunged by 45 per cent.

The RDEC scheme was introduced in April 2013 for large companies. The SME scheme was introduced in 2000 allowing smaller companies to claim a deduction from corporation tax liability based on their enhanced R&D expenditure or to claim a payable tax credit if the company is loss making.

In the 2022 Autumn Statement the government announced cuts in both rates. The enhancement rate was lowered to 86 per cent and the credit rate to 10 per cent.

The HMRC report shows that the amount of tax relief claimed through the SME scheme fell by 29 per cent compared with the previous year, to £3.15billion, while the amount of relief claimed through RDEC rose by 36 per cent to £4.41bn.

All the downward trends highlight the impact the reduced relief rates and the increased administrative effort needed to apply for them has had on SMEs.

They also raise questions about how the changes may be negatively affecting innovation and growth plans in small businesses.

However, our message is clear. While there has been a sharp drop in the number of claims and the process may be more complex, smaller businesses should not be put off taking full advantage of R&D tax credits.

They can still be a powerful tool for ambitious SMEs working hard to drive growth through innovation.

We are here to help eligible businesses, whatever their size or sector, take full advantage of the scheme.

We will work with you to assess if your business qualifies and deliver full support and guidance in navigating the claims process.

• To discuss how we can support you in making a claim for R&D tax credits please contact me on 01772 430000

Amnesty scheme launched for Covid loan debtors

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Businesses and individuals who still owe Covid scheme money to the Treasury have been given a time-limited opportunity to pay it back before tougher sanctions apply.

The voluntary repayment scheme gives them until December this year to return pandemic scheme cash – no questions asked.

The move comes as the government continues to do everything in its power to recoup money lost to Covid fraud.

It is aimed at businesses and directors that were not entitled to or did not need money given to them after applying for it during the pandemic.

Announcing the move, The Treasury said: “Individuals who don’t take this last chance to come forward and repay any outstanding money could face prosecution when the government receives additional investigatory powers next year.”

A Covid fraud reporting website is also being launched to allow members of the public to report suspected fraud.

Covid Counter-Fraud Commissioner Tom Hayhoe said: “Our message to those who still owe Covid era money is simple – pay now, clear your conscience, or face the consequences.

“This money belongs in communities, the NHS, police and Armed Forces. Those who don’t take up this straightforward offer and have knowingly, wrongly claimed tax-payer-funded help could face prosecution, disqualification, or prison.

“The digital trail is forever, so the time to settle is now – before new investigatory powers and tougher rules come into force.”

All Covid schemes, including loans, grants, social security and tax benefits fall under the voluntary repayment scheme.

More than £10billion was lost to pandemic fraud, flawed contracts and waste under the previous government’s mismanagement of pandemic era procurement and schemes. £1.54bn has already been recovered through existing efforts.

• To discuss any issues raised by this article please contact me on 01772 430000

Taxman steps up pension tax relief scrutiny

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HM Revenue and Customs is cracking down on pension tax relief as part of a broader drive to maximise revenue collection, according to reports.

The tax authority is said to be stepping up its scrutiny of claims from higher earners and “lowering the threshold” for requiring evidence to support requests.

Additionally, HMRC will no longer accept claims by telephone. Instead, taxpayers are being instructed to submit claims online or by mail.

And the media reports say that individuals will also be “asked to provide evidence where it would not previously have been required”.

Under the present system, taxpayers can save a maximum of £60,000 a year into their pension and benefit from tax relief.

Basic-rate taxpayers automatically get 20 per cent relief added to their pot, while higher earners paying 40 per cent or 45 per cent tax may need to claim the extra tax relief through their self-assessment tax return.

HMRC said the changes were being made to “protect taxpayers’ money” after an internal review found some workers were making incorrect claims for pension tax relief.

It has been reported that a review of claims for up to £10,000 in relief discovered that almost a third were for incorrect amounts.

The most common mistakes were claiming without higher-rate taxpayer status, seeking relief under a “net pay” arrangement where it had already been granted and providing estimated rather than precise contribution figures.

About 80,000 claims for Personal Pension Relief are submitted to HMRC every year.

A spokesperson for HMRC told the Daily Telegraph newspaper: “We’re lowering the threshold to ensure that people claim the right amount of relief and protect taxpayers’ money.

“This comes after we conducted a review which revealed that many claims below the current evidence threshold were incorrect.”

Chancellor Rachel Reeves is reportedly considering reducing the amount of money pensioners can withdraw from their savings pot without paying tax to as little as £40,000 in her Budget in November.

If it happens, it is a move that would be expected to raise more than £2billion for the Treasury.

• To discuss any issued raised by this article or any tax issues please contact me on 01772 430000

Commission to act on ‘retirement crisis’

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The government has revived the landmark Pensions Commission to confront what it has labelled a ‘retirement crisis’.

It says that without action tomorrow’s retirees are on track to be poorer than today’s.

Almost half of working-age adults are still saving nothing with low earners, some ethnic minorities and the self-employed least likely to be pension saving.

The revived Pension Commission will consider the long-term future of the pensions system.

The Commission of 2006 was declared a huge success at the time, building a consensus for the roll-out of Automatic Enrolment into pension saving that means 88 per cent of eligible employees are now saving, up from 55 per cent in 2012.

However, new analysis shows that there is more to do with the incomes of retirees set to fall over the next few decades if nothing changes:

The government says retirees in 2050 are on course for £800 or eight per cent less private pension income than those retiring today.

And it points to the fact that four-in-ten or nearly 15 million people are under saving for retirement.

This partly reflects too many working age adults (45 per cent) saving nothing at all into a pension, with lower earners, the self-employed and some ethnic minorities particularly at risk.

More than three million self-employed people are not saving into a pension.

The new analysis also reveals a 48 per cent gender pensions gap in private pension wealth between women and men.

A typical woman currently approaching retirement can expect a private pension income worth over £5,000 less than that of a typical man.

While the introduction of Automatic Enrolment increased the numbers saving, saving levels have often remained low. Around one-in-two workers in the private sector only save around the minimum contribution level.

The relaunched commission will explore the complex barriers stopping people from saving enough for retirement, with its final report due in 2027.

The government says: “It will examine the pension system as a whole and look at what is required to build a future-proof system that is strong, fair and sustainable.”

Work and Pensions Secretary Liz Kendall says: “People deserve to know that they will have a decent income in retirement – with all the security, dignity and freedom that brings. But the truth is, that is not the reality facing many people, especially if you’re low paid, or self-employed.

“The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place.”

• To discuss any issues raised by this article please contact me on 01772 430000