UK SMEs Demand Tax Relief and Cost Reductions in Chancellor John Healey’s First Budget

UK small businesses are freezing investment decisions as they await the government’s first Autumn Budget, with over half of SMEs delaying major spending until tax clarity emerges. For fintechs and alternative lenders, this stagnation in capital expenditure signals a tightening credit environment where growth-oriented financing is being traded for cautious cashflow preservation.

What was announced

Bibby Financial Services (BFS) released its latest SME Confidence Tracker, highlighting a significant disconnect between government rhetoric and business sentiment. The data shows that 54% of UK SMEs are currently holding back on major investment decisions until after the Autumn Budget. This hesitation is driven by a lack of confidence in the government's pro-business agenda; only one in five UK small businesses believe the upcoming fiscal statement will actually benefit their operations.

The primary demand from the SME sector is a reduction in the cost of doing business. Specifically, 46% of respondents are calling for a cut in corporation tax, while 43% want a guarantee that no new increases will be implemented. Beyond corporation tax, 41% of businesses are seeking a freeze on capital gains tax, and 39% want a reversal of the recent rises in employer National Insurance Contributions.

Furthermore, 36% of SMEs are advocating for the government to extend business rates relief—currently limited to the retail, hospitality, and leisure sectors—to other industries. This "wish-list" reflects a broader concern that the current tax burden is stifling the very activity the government aims to unlock, such as hiring new staff, purchasing equipment, and developing new products. Many SMEs report they are unable to plan for growth without knowing what their final tax bill will look like, leading to a standstill in economic activity across multiple sectors as they wait for Prime Minister Andy Burnham and Chancellor John Healey to deliver their first budget.

"SMEs have heard pro-business promises before and been let down. Now they are waiting to see whether this Government will deliver. More than half of SMEs are holding back major investment until after the Budget, unable to plan for growth without knowing what their tax bill will look like. That’s money not being spent on new equipment, new hires, and new products, which is exactly the activity this Government says it wants to unlock. SMEs don’t lack ambition. What’s holding them back is the weight of the current tax burden. Ease that burden, give them stability, and they’ll invest."

Derek Ryan, CEO for North West Europe at Bibby Financial Services

The companies involved

Bibby Financial Services (BFS) is a prominent independent financial services partner to over 9,000 businesses worldwide. Operating as a specialist provider of invoice finance, asset finance, and foreign exchange solutions, the company positions itself as a critical alternative to traditional high-street banks for the SME sector. BFS has a significant footprint in the UK and international markets, providing the working capital necessary for small to medium-sized enterprises to manage cashflow and fund expansion.

The firm operates under the leadership of executives like Derek Ryan, who serves as Regional CEO for North West Europe. BFS has historically focused on bridging the funding gap for businesses that may struggle to secure traditional lending, particularly during periods of economic volatility. By leveraging its expertise in asset-based lending, the company supports a diverse range of sectors, from manufacturing and construction to transport and recruitment. Its market position is defined by its ability to offer more flexible, relationship-driven financing compared to the rigid criteria often found in larger corporate banking structures, making it a key barometer for small business sentiment in the UK.

What FF News has reported before

FF News has closely followed BFS’s efforts to support the SME ecosystem amidst shifting economic pressures. Recently, the publication covered how UK SMEs Slash Payment Terms as Unpaid Invoices Hit £72,000 Average, a trend BFS identified as a defensive measure against late payments. To bolster its own lending capacity, the firm Bibby Financial Services Secures €250m HSBC Facility to Fuel Global SME Growth earlier this year.

Internal growth has also been a focus, with the company having Bibby Financial Services Appoints Oliver Batley to Spearhead Asset Finance Growth. Additionally, BFS data previously revealed a shift in trade patterns as UK SMEs Pivot Back to Europe as US Tariffs Cause £59,000 Average Loss, highlighting the firm's role in tracking the macroeconomic challenges facing its client base.

What this means

The SME sector’s refusal to commit capital ahead of the budget puts the government in a difficult position. If the fiscal statement fails to address the cost-of-business concerns, the "pro-growth" agenda risks stalling before it begins. For the fintech and alternative lending industry, this period of SME paralysis creates a vacuum in demand for expansion capital, potentially shifting the focus toward survival-based credit and debt restructuring. The market is now watching to see if the government will trade short-term tax receipts for long-term industrial investment, or if the current tax-heavy environment will become a permanent fixture that forces SMEs to remain in a defensive crouch.