Rachel Reeves' tax plans will cause 'mass exodus' as warning issued - Daily Star

A recent report by Rathbones has revealed that about one in every eight leaders of small and medium-sized enterprises (SMEs) in the UK are seriously thinking about relocating either themselves, their business, or both, mainly because of the heavy tax burden they're facing. This translates to roughly 680,000 out of the 5.67 million SMEs across the country. These findings come just weeks before the Autumn Budget announcement by Rachel Reeves, adding more pressure on the government to find ways to restore business confidence amid rising taxation and regulatory costs. Among those pondering a move, about a third are considering taking their businesses overseas, with Ireland, Dubai, and the United States being the top choices. Meanwhile, another 26% of SME leaders are worried about the current tax climate even if they don't have immediate plans to relocate. The general sentiment among SMEs is one of dissatisfaction, with nearly two-thirds feeling the government isn’t doing enough to encourage business growth, and over 40% believing the current policies are unsupportive. The increase in taxes and employment costs—such as hikes in employers' national insurance contributions and the national living wage—are identified as key pain points affecting how businesses operate. Ade Babatunde, senior financial planning director at Rathbones, highlighted the critical role SMEs play in the UK economy and expressed concern over the potential loss of jobs and tax revenue if these businesses continue to leave. Adding to the challenges, the British Chambers of Commerce has pointed out that small exporters are struggling to make sense of post-Brexit trade regulations, with many experiencing stagnant or falling export orders, which leaves companies financially vulnerable. Begbies Traynor's recent analysis also flagged a sharp rise in SMEs facing serious financial distress, especially those in consumer-facing sectors. Many small business owners are bracing themselves for possible changes to income tax, capital gains tax, and business rates in the upcoming Budget. Past tax increases, including those to capital gains tax and employer national insurance last year, have already forced numerous SMEs to put recruitment on hold or even cut down on staff. Considering that SMEs employ 60% of the UK’s workforce and make up 99% of private sector companies, experts warn that ongoing fiscal pressure on these businesses could have broad knock-on effects on employment levels, investment, and long-term economic growth. Babatunde stressed that the government must step up with more targeted support for SMEs, whether through tax relief or incentives that encourage growth and risk-taking. Without such measures, the UK risks a significant exodus of talent and enterprises at a time when the economy is already vulnerable. The looming Budget and the ongoing regulatory environment will likely be pivotal in shaping the future landscape for the nation's small and medium-sized businesses.