- New data shows almost three in 10 small employers would hire more staff if Small Business Rate Relief were to be expanded
- FSB calls on Chancellor to widen the relief, help on staff costs and ease energy bills at Budget
Expanding business rate relief at the Budget could help more small firms invest, recruit and grow, according to new data from the Federation of Small Businesses (FSB).
Almost three in 10 (28%) small employers say they would hire more staff if Small Business Rate Relief (SBRR) were to be expanded.
Even one in 10 (11%) sole traders would consider taking on a member of staff for the first time if the relief saved them money.
More than a quarter (26%) of small employers would increase employee pay or benefits.
In England, SBRR gives a 100% discount for properties with a rateable value of up to £12,000, with tapered relief up to £15,000. This has remained unchanged for almost 10 years.
Ahead of this month’s Budget, FSB is calling on the Chancellor to increase the SBRR threshold to £25,000, which would remove at least 250,000 more small businesses from paying rates, giving them much-needed room to expand and grow.
FSB’s data found over a third (36%) of small businesses say SBRR is essential or important to their business. The figures are even higher for the retail and accommodation and food sectors, where costs are particularly high, with around half of small firms seeing it as essential or important (49% and 47% respectively).
As well as expanding SBRR, FSB is urging the Chancellor to:
- Substantially increase the Employment Allowance, then index it in line with the National Living Wage (NLW), so support with employer National Insurance contributions (NICs) keeps pace as wage costs rise and continues to cover at least the NICs of four full-time workers on the NLW. Without that protection, rising employment costs risk putting small firms off hiring, with young people and those with health challenges among those most likely to lose out.
- Cut Business Asset Disposal Relief to 14 per cent, reversing the rise to 18 per cent and restoring the pre-April 2026 rate after higher capital gains taxes weakened incentives for entrepreneurs to expand and grow. The higher rate has already damaged growth intent, making entrepreneurs less willing to expand, invest and take risks on growing their businesses.
- Raise the VAT registration threshold to £100,000, keeping more sole traders and the smallest firms out of a tax that can swallow more than a working week a year in compliance. It also sees firms deliberately restrict turnover to avoid being pulled into the VAT system.
- Remove 75% of Renewables Obligation costs from small business energy bills, giving small firms the same help households have already received and easing the pressure of sharp rises in standing charges and electricity wholesale prices.
- Introduce a Statutory Sick Pay (SSP) rebate for small employers, helping small firms manage rising employment costs and making it easier for them to hire and support people with health conditions.
Tina McKenzie, FSB’s National Chair, said: “Small businesses across the UK are up against huge and persistent cost rises that are seeing so many struggle with running their business, let alone investing and expanding. This is the most important opportunity for the Government to make its more pro-small business tone a reality.
“If we are to get the growth needed, the Budget must be a moment for some meaningful action, backing the small firms and self employed that are so crucial to the economy.
“We need a tax system that rewards ambition rather than punishes it. Widen Small Business Rate Relief so fewer firms are dragged into a punishing pre-profit tax, protect the Employment Allowance so hiring does not become steadily more expensive, reverse the damaging rise in Business Asset Disposal Relief and raise the VAT threshold so firms are not deliberately holding back turnover to avoid a cliff edge. These are practical changes that would give small businesses a reason to invest, hire and grow.
“This Budget will be an early test of whether the new Government will put itself on the side of those who run a small business. Ministers say they want growth, but growth does not happen by squeezing margins, making employment more expensive and putting barriers in the way of expansion. If the Chancellor wants to win back the confidence of entrepreneurs, he should start by making it worthwhile to take a risk again.”
