UK businesses brace for job cuts and hiring freezes as tax concerns mount

Among business owners, tensions are high in the run-up to the Autumn Budget, according to a new report.

The survey of hundreds of company owners reveals that almost four in ten expect to have to make redundancies over the next 12 months, to cushion the possible financial blow of further tax rises.

The widespread unease across UK business owners was partly triggered by last year’s Autumn Budget, which increased employer National Insurance rates, leading to hiring slowdowns and tighter margins.

Understandably, business owners are waiting in anticipation for this year’s changes. Will the 2025 Budget have the same bleak impact, or offer some much-needed relief?

Redundancies on the horizon

S&W’s The BOSS (Business Owners Sentiment Survey) report surveyed 500 UK business owners with turnovers of over £5m.

The report found that 37% of business owners expect to make redundancies and 39% foresee a hiring freeze, reflecting an ongoing crisis of confidence as businesses struggle to bounce back a year on from last year’s Autumn’s Budget.

Chancellor Rachel Reeve’s 2024 financial statement saw tightened fiscal policy, which raised employment costs. Notably, increased employer NICs have impacted businesses UK-wide, with sectors such as retail and hospitality facing additional strain.

Toby Tallon, Tax Partner at S&W, said the research sent a clear message to the Chancellor ahead of the November 26 Budget. “Further tax rises on risk-takers and wealth creators could drive more of the UK’s most successful businesses and owners out of the country.”

Business owners eye overseas moves

Confidence among UK business owners has dipped so sharply that many are now considering leaving the country entirely. The report shows that 41% of respondents would think about moving their operations abroad if November’s Budget bears more bad news.

Several proposed changes are fuelling thoughts of a mass exodus. Around 40% of business owners cite the proposed extension of inheritance tax to pensions from April 2027, while 42% point to impending cuts in business property relief and agricultural relief.

Together, these shifting policies have many entrepreneurs questioning whether the UK still offers a stable, competitive environment for growth.

For those already navigating high costs, tighter margins and ongoing economic uncertainty, the threat of further tax rises makes relocation a realistic survival move, rather than a dramatic last resort.

What’s causing uncertainty among business owners?

The drop in confidence among UK employers can largely be traced back to recent tax policy changes. This, combined with rising operational costs, supply chain pressures, higher wage expectations and ongoing skills shortages, makes long-term planning increasingly difficult.

These pressures are already visible across the country, with insolvency levels continuing to climb. Hiring stalls are now also spreading beyond sectors like retail and hospitality, to impact industries like communications and healthcare.

And with so many businesses on the brink, industry groups are urging the Chancellor to deliver a pro-growth, pro-enterprise Budget. They argue that stability, supportive tax policy and targeted relief can help restore confidence, avoid redundancies and ensure the UK remains a habitable environment for SMEs.

“[In this month’s Budget] we need bold policies that give entrepreneurs confidence and keep Britain open for business while staying fiscally responsible”, Tallon stresses.