Small business owners fear Labour’s upcoming Autumn Budget of potential tax hikes could threaten their livelihoods.
Mickey Whiteman, 33, who owns RD1 Clothing, an independent menswear store based in Hastings, says that increases in dividend tax and National Insurance (NI) employer contributions could be “devastating” for small businesses, particularly those like his that rely on dividends for family income.
Chancellor Rachel Reeves has warned that “difficult decisions” will be made in today’s budget, as the Government looks to fill a near-£40billion shortfall in the nation’s finances. National insurance contributions for employers and dividends and tax changes have become a few of the key areas of speculation. Fuel Duty, which is a tax included in the price motorists pay for petrol at the pump, may also be raised for the first time in over a decade.
Mr Whiteman said: “Raising dividend tax will put further pressure on our already strained cash flow. It’s tough enough competing against retail giants. Tax hikes on small businesses like ours would be devastating.”
In addition to dividend tax concerns, Mr Whiteman pointed out that increases in fuel duty and NI contributions would worsen an already challenging situation.
He said: “With half of our business operating online, higher fuel duty would likely increase courier costs – an already significant and increasing expense for us. Even worse, it will raise costs for our suppliers, making our stock more expensive.
“Trying to absorb these rising costs to avoid passing them on to our customers would tighten our already narrow margins, leaving us with tough choices to make.”
This isn’t just a local issue; it’s a national one, as Simply Business research shows that one in four SMEs fear closure if trading conditions don’t improve.
Bea Montoya, COO of Simply Business, underscored the gravity of this Budget for the small business community, stating: “The Budget on October 30 will be the clearest signal yet for whether the small business community’s hope, trust – and vote – in the Labour Party was vindicated. Small businesses are desperate to know that they’re being heard.
“With our collective economic prosperity in the balance, we urge the Chancellor to create the conditions for small businesses to thrive before it’s too late. We will all feel the benefit.”
Mr Whiteman said RD1 Clothing has brought continuous employment opportunities to the community. However, he fears that further NI contributions could limit his capacity to hire, especially his goal to attract young talent.
He said: “Increasing National Insurance contributions would be a major challenge for us. It’s already tough to balance hiring more staff while keeping the business profitable.
“We want to keep growing and provide local employment, but rising employment costs will slow that down.”
Mr Whiteman is also eager for genuine support to boost the local economy. Pointing to the halted investments from the “Towns Fund” that raised initial excitement, he said: “Seaside towns like Hastings face unique challenges, particularly in attracting tourists year-round and ensuring the local community thrives.
“We still don’t know if it’s going ahead – it feels like false hope. Our town needs more than promises to stay vibrant for both locals and tourists.”
More than anything, Mr Whiteman hopes for policies that protect small businesses, like RD1, which are the “backbone of local communities.” He argued that funds should come from corporations with high profits instead of independent businesses.
He said: “We need targeted support. Protecting small businesses and encouraging young people to start their own ventures would strengthen local economies and allow us to continue creating employment and offer something unique.”
Mr Whiteman, who co-founded RD1 with his wife and dreams of starting a family, said the current uncertainty has put personal plans on hold. He explained: “For now, we’re pouring everything into RD1, hoping for a fairer future for small businesses like ours.”
The Autumn Budget will be announced today at around midday.
