Small Businesses: Tax Allowances

The Government recognises that the cumulative burden of taxation, business rates, regulation and reporting requirements impose costs on businesses, recognising that smaller firms can experience these burdens more acutely.

The Government assesses the effects of tax and regulatory measures when they are introduced and keeps wider pressures on businesses under review. For example, tax measures are accompanied by assessments of their impacts on businesses, and the Government has published analysis of the Employment Rights Act. That analysis estimates its costs at around 0.1 per cent of annual employment costs.

The Government has taken action to reduce administrative and compliance burdens, while considering the wider operating environment for small and medium sized businesses (SMEs). This includes increasing the monetary size thresholds for micro-entities, SMEs and large companies in April 2025 – moving 132,000 firms onto lighter touch reporting requirements, and saving £185m per year.

Around one third of properties pay no business rates through 100 per cent Small Business Rate Relief, with a further 85,000 benefiting from tapered relief. The Small Business Regulatory Taskforce is identifying further opportunities to streamline regulation and reduce administrative burdens, including those associated with reporting and data requirements. The Government continues to support employers through wider labour market and skills policies, including fully funded apprenticeship training for eligible young people in SMEs.

The Treasury works closely on small business issues with the Department for Business, Innovation, Science and Trade which is the lead department on SME policy.