CONFIDENCE among SMEs is being eroded by the Government’s constant changes to tax rates, a leading expert has warned.
All eyes are firmly fixed on the Budget later this month – with further now widely expected.
Michael Ball, Tax Partner at Streets, a leading firm of Chartered Accountants, fears these repeated changes are undermining confidence among the UK’s small and medium-sized enterprises (SMEs).
He also believes constant adjustments to policies such as National Insurance, the minimum wage and inheritance tax are creating uncertainty which will ultimately prevent businesses from planning for growth.
With many SMEs already under financial pressure, Mr Ball thinks the government’s short-term approach risks damaging long-term economic stability and discouraging investment across key sectors.
He said: “SMEs need consistency and predictability to plan for growth. Yet we’ve seen a pattern of reactionary tax changes, which doesn’t focus on the long-term strategy.
“Each new announcement, whether it’s a tweak to National Insurance or a shift in inheritance tax, adds another layer of uncertainty. Businesses are focusing on managing costs rather than investing or expanding.
“The frequent changes to rates, reliefs and business incentives are forcing many firms to adopt a defensive stance.
“Rachel Reeves’ speech on Tuesday, appeared to pre-empt further tax rises in the Autumn Budget. Increases in headline taxes such as Corporation Tax or VAT, and smaller rises in income tax, National Insurance and business rates, combined with new compliance requirements will continue to put pressure on SME’s margins.”
Ball argues that this fragmented approach to taxation fails to support businesses through a period of economic recovery and discourages entrepreneurship.
“The government’s inability to maintain a coherent tax roadmap means SMEs are being left to navigate constant shifts without clarity,” Ball added. “This lack of stability is damaging confidence, leading many to delay investment decisions or, in some cases, sell off assets to meet new tax liabilities.”
Recent changes to inheritance tax have further complicated succession planning, particularly for family-run firms and agricultural businesses. Ball highlights the double taxation risk that arises when company assets are subject to inheritance tax, calling it “a significant deterrent for long-term investment and growth.”
“Although these moves may appeal to voters, they often ignore the practical impact on real businesses,” he said. “For many owners, these policies feel punitive rather than supportive.”
With many SMEs already grappling with rising costs, higher wages and economic uncertainty, Ball urges the government to prioritise a clear, long-term tax strategy over short-term wins.
“We need joined-up thinking, not just on taxation, but on how policy supports sustainable growth,” Ball concluded. “Without a stable fiscal framework, the UK risks stifling the very businesses that drive employment, innovation and regional development.”
