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A staggering one in eight leaders of small and medium-sized enterprises (SMEs) in the UK are seriously considering relocating themselves, their businesses, or both, due to the current tax burden. This equates to approximately 680,000 out of the UK's 5.67 million SMEs, as per a new report by Rathbones. The findings emerge just weeks before Rachel Reeves' Autumn Budget, piling on the pressure for the government to bolster business confidence amidst escalating taxation and regulatory costs. Rathbone's study discovered that among those contemplating relocation, a third are mulling over moving their businesses overseas, with Ireland, Dubai , and the US being the preferred destinations. Moreover, an additional 26% of SME leaders express concern about the tax environment, even if they have no plans to relocate, as reported by City AM . The survey also underscores a wider dissatisfaction with government policy. Nearly two-thirds of SMEs feel the government isn't doing enough to stimulate business growth, and more than two in five deem current policies unsupportive. Changes in tax and rising employment costs, including hikes in employers' national insurance and the national living wage, were pinpointed as key factors impacting business operations. Ade Babatunde, senior financial planning director at Rathbones, commented: "SMEs are the backbone of the UK economy, and the fact that many are considering leaving because of taxation is deeply concerning. Their departure would mean the loss of valuable jobs and tax revenue, at a time when the government is trying to boost growth." Meanwhile, the British Chambers of Commerce has highlighted that small exporters are battling to understand post- Brexit trade regulations, with stagnant or declining export orders leaving numerous firms financially exposed. Begbies Traynor has recently identified a dramatic increase in SMEs facing severe financial distress, especially within consumer-facing industries. Small enterprises are also particularly preparing for potential alterations to income tax, capital gains tax , and business rates in Reeves' forthcoming Budget. Earlier tax increases, including last year's rises to capital gains tax and employer national insurance, have already prompted many business owners to halt recruitment or cut staff numbers. Given that SMEs employ 60 per cent of the UK workforce and constitute 99 per cent of private sector companies, specialists caution that sustained fiscal strain on smaller enterprises could trigger ripple effects for employment, investment, and sustained economic expansion. "The government needs to offer more targeted support for SMEs, whether through tax relief or policies that incentivise growth and risk-taking," Babatunde added. "Otherwise, we risk seeing a significant exodus of talent and businesses at a time when the economy can least afford it." For the latest breaking news and stories from across the globe from the Daily Star, sign up for our newsletters .
