Hi

As the new tax year begins, small business owners and consumers alike might be wondering if this is really what they signed up for under a Labour government. With record increases in employer National Insurance, a steep rise in the National Minimum Wage, and higher business rates, it’s fair to ask: who’s actually footing the bill?

In my view, taxes on businesses usually end up as taxes on consumers. It might sound counterintuitive, but when costs go up for small firms, they have little choice but to pass them on in higher prices. Worse still, it’s those on lower incomes who struggle the most when everyday costs creep up.

Small firms under siege

Employers’ National Insurance is set to hit levels that many small businesses simply can’t absorb. The Institute for Fiscal Studies (IFS) estimates an employer will pay hundreds more per year in tax for each median-paid worker. If you’re already juggling inflation and rising energy bills, that’s a lot of extra pressure.

Talk to any small café or tradesperson, and you’ll hear the same story: raise prices, or risk going under. Many opt for the former, forcing their regulars and loyal customers to shoulder the extra burden.

Who really pays?

Let’s say you run a small shop. Your National Insurance costs go up. Your new business rates bill arrives. And you have to raise wages for your staff—because you want them to be paid fairly. Before you know it, you’re trying to decide between cutting back on investment or charging your customers more. If you’re like most small business owners, you’ll do what it takes to keep the lights on. 

That often means higher prices at the till.

Sadly, it hits those on tight budgets the hardest. A small jump in food, transport, or basic services can feel crushing when your weekly earnings are already stretched. So if politicians claim that businesses can just “absorb” these higher costs, they’re overlooking what happens in the real world.

Labour’s big missed opportunity

I’m on record saying the Chancellor got it wrong in her Autumn Statement—and that the Labour manifesto missed a trick by refusing to adjust income taxes for median and higher earners. A fairer system would see those with the broadest shoulders paying more.

Instead, by relying on employer taxes and business rates, the government is indirectly putting the squeeze on the very consumers they pledged to protect. The Confederation of British Industry (CBI) and the Federation of Small Businesses (FSB) both warn that excessive taxes on firms will inevitably lead to price hikes. It’s not rocket science: if small businesses aren’t given breathing space, their customers end up paying.

Looking ahead: is there a better way?

We need a more balanced approach—one that helps businesses grow, invests in public services, and ensures those on lower incomes aren’t left behind. Maybe that means braver decisions around income tax for top earners. Or genuine business rates reform so local high streets don’t die out under the weight of outdated property taxes.

I’ve seen first-hand how quickly small enterprises can flourish if given the right environment. They’re the engines of growth, adding fresh ideas, local jobs, and community spirit. But they can only do that if they’re not taxed to oblivion.

If we want sustainable economic growth, we have to look after our small business community. Right now, we’re at risk of doing the opposite—treating them like an easy pot of money to shore up the public purse. Ultimately, that means higher prices for everyone, hitting the less well-off the hardest.

Let’s demand policies that share the load more fairly, and let’s not shy away from honest conversations about who can genuinely afford to pay more tax. Because when small businesses struggle, we all feel the pinch in our wallets and on our high streets.

So, I’ll leave you with this question: Is there a better way? I believe so—but it starts with truly valuing our small business sector and recognising that taxing them indiscriminately is just another way of taxing you and me.

Noel Guilford

PS I'm sure it wasn't you, but some readers may have been fooled by Tuesday's email. In case you're wondering, yes it was a spoof email. The government aren't - as far as I know - planning to introduce an Office of the Artificial Intelligence Commissioner (OAIC)....unless, that is, you know differently!