Action needed to relieve the pressure

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Small firms are facing pressures comparable in scale to those during the Covid pandemic, according to a report from the House of Commons Business and Trade Committee.

Tax burdens, energy costs, crime and late payments are among the issues highlighted in the report, which was launched by committee chair Liam Byrne to an audience of small business owners at the Federation of Small Businesses Westminster office.

The committee’s inquiry found that while emergency support was rapidly mobilised during the pandemic, there is currently no equivalent, coordinated response to the cumulative pressures now facing small and medium-sized enterprises (SMEs), despite their central role in the UK economy.

SMEs account for 99.8 per cent of all UK businesses and form the backbone of local economies and high streets.

Evidence to the committee has shown that many are now operating with little financial resilience and limited capacity to absorb further shocks.

The Federation of Small Businesses estimates that tax compliance costs SMEs 242 million hours and nearly £25billion each year.

There is also concern that the UK’s VAT threshold is discouraging firms from expanding, while complexity and cliff-edges penalise growth.

The committee is calling for the reform the VAT system to remove growth-discouraging cliff edges.

That would include reviewing the VAT registration threshold and reducing complexity that penalises expanding firms, particularly in labour-intensive sectors.

It also wants business rates replaced with a fairer system that reflects a firm’s ability to pay, reduces the burden on bricks-and-mortar businesses, and supports the vitality of high streets.

Other recommendations include simplifying and improving access to the skills system for SMEs, ensuring training and apprenticeship provision is designed around the needs of smaller employers and supports productivity growth.

The MPs have also called for introduced targeted energy support for SMEs, including fairer pricing, stronger protections for smaller users, and greater transparency in the energy market.

Committee chair Liam Byrne said: “The evidence we heard during this inquiry was stark. Many small businesses are now operating under pressures comparable to those experienced during the Covid pandemic but this time without an emergency support framework in place.

“SMEs are facing late payments, rising energy costs, increasing crime, a complex tax system and barriers to growth that are compounding rather than easing.

“These pressures are not isolated; together they pose a real risk to business viability, high streets and economic growth.

“High streets do not die by accident. If the government is serious about growth, it must set out a more coherent and ambitious plan for the businesses that make up so much of the UK economy.”

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

More reporting to close the tax gap

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The government is calling for additional reporting from close companies as it looks to reduce the small business tax gap.

Under new proposals now under consultation, close companies will have to report details of transactions with participators to HMRC, including the amount, date and details of the recipient for each transaction.

A close company is controlled by its directors or by five or fewer participators. A participator is someone who has an interest in the capital or income of the company, such as a shareholder.

HMRC says that it is not receiving “the full picture” and the proposals are focused on error and evasion in transactions that occur between a company and its owners. The consultation will run until June 10.

Announcing the consultation it said: “The risks we see in the tax gap are particularly acute with close companies, where there may not always be a clear distinction in practice between the company and its participators, and the merger of interests and finances can both encourage error and facilitate evasion.”

The new reporting requirements being considered would include detailed information about payments, via cash, bank transfer or otherwise.

Companies would also have to report details of sales of assets to the company, the purchases of assets from the company and dividends or other distributions.

The Treasury says the small business tax gap is 60 per cent of the overall tax gap, and the small business Corporation Tax (CT) gap makes up a significant proportion of this.

This tax gap has been increasing since the 2011 to 2012 tax year and stands at £14.7 billion in absolute terms.

The government says it will analyse the consultation responses and publish a summary of responses after the consultation closes.

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

Are you protected against a cyber-attack?

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Cybercrime affects more than 32 per cent of Lancashire businesses monthly – with the average cyber-attack costing the targeted company £15,300.

Now Boost, Lancashire’s Business Growth Hub, is backing a national government campaign to ‘lock the door’ on cyber criminals.

The aim is to give companies practical advice to protect themselves against common threats.

The campaign is being led by the National Cyber Security Centre (NCSC) and the Department for Science, Innovation and Technology (DSIT).

It aims to reach busy SME businesses, encouraging them to engage with key protections such as the government’s Cyber Essentials scheme.

Many cyber incidents exploit weaknesses which Cyber Essentials is designed to protect against.

Andrew Leeming, programme manager, Boost said: “Cyber threats cost UK businesses £14.7billion a year.

“The government’s campaign is designed to highlight the tools already available to businesses across the UK, particularly smaller businesses, so they can minimise risks and focus on growing their business.

“As Lancashire’s Business Growth Hub, it is vital that we use our media channels to amplify that message across the county and help the support reach businesses.

“Keep an eye on our website, newsletters and social media channels for top tips on protecting your business or head to the NCSC website to find out more.”

To help businesses get started, the campaign highlights several free tools and resources:

• Cyber Essentials Readiness Tool – an online self‑assessment to identify gaps
• Free 30‑minute consultations with an NCSC‑assured cyber advisor for SMEs that are preparing for Cyber Essentials certification
• The chance to preview the Cyber Essentials ‘Question Set’ for free. The ‘Requirements for IT Infrastructure’ can be used to help businesses identify if they’re ready for certification.

Developed by experts at NCSC and DSIT, Cyber Essentials sets out clear practical steps organisations can take to protect themselves from the most common attacks.

This includes keeping software up to date and controlling who has access to accounts and data to immediately boost cyber resilience.

Last year, 92 per cent fewer insurance claims were made by organisations with Cyber Essentials in place.

Certification can also help businesses win government contracts. Eligible firms can access free cyber insurance, including a 24/7 emergency helpline.

NCSC chief executive Dr Richard Horne said: “Many small business owners assume their business is too small to be on cyber criminals’ radar, but in reality, we know most attackers don’t care about size, reputation or logos – they are looking for opportunity and weaknesses.

“Small businesses do not need to go to the ends of the earth to put baseline cyber security measures in place as the Cyber Essentials scheme can help them take practical steps today.

I urge all businesses to implement the five key security controls to help protect themselves against the most common, damaging online threats.”

Growth forecasts lowered – but Reeves insists plan is working

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Chancellor Rachel Reeves has delivered her update on the state of the UK economy against the backdrop of growing conflict in the Middle East that is set to send energy prices soaring and create more market uncertainty.

The estimate for the country’s economic growth has been lowered for this year, but the Chancellor insisted her financial plan is working.

In line with her commitment to only hold one fiscal event per year, she did not announce any new tax changes in the Spring Forecast.

However, the statement included downgraded OBR forecasts for growth in 2026 from 1.4 per cent to 1.1 per cent, growing slightly slower in 2026, and faster in 2027 and 2028.

She told the Commons: “This government has the right economic plan for our country” and said it had restored economic stability in an “uncertain” world.

She added: “The new forecasts from the Office for Budget Responsibility confirm that our plan is the right one – inflation is down, borrowing is down, living standards are up and the economy is growing.”

The OBR says unemployment will peak at 5.3 percent this year and then fall gradually to 4.1 per cent by 2030. It also says the two per cent target on inflation will be met later this year.

The forecasts do not take into account any potential impact from events in the Middle East – but the OBR warns it “could have very significant impacts on the global and UK economies”.

The Chancellor said that she was poised to set out “three major choices that will determine the course of our economy into the future”.

There may have been no new tax changes but we already have a number of known changes in motion; the freezing of income tax thresholds until 2031, the restrictions to salary sacrifice in 2029, increases in savings and investment taxes from April 2026, and the reduction of cash ISA to 12,000 from April 2027.

Meanwhile, don’t confuse the lack of changes in policy (this time) for stability. The problems of youth unemployment, and the pressure from high taxes is likely to weigh down the growth potential for some years to come.

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

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.”