Businesses Announce Pay and Hiring Freeze Amid Chancellor's Tax Hikes

SMEs brace for a tax‑twist: Pay freezes, recruitment stalls and a dash of optimism

UK’s top insurance‑financing firm, Premium Credit, just dropped fresh findings that small and medium‑sized businesses (SMEs) are gearing up for a government tax ramp‑up – especially the jump in employer National Insurance.

What the numbers say

52% of SMEs say they’re worried about rising taxes, with 13% almost freaked out.
Only 13% shrug: “Not really.”
About a quarter (26%) predict they’ll tighten pay bumps.
19% plan to hold off on hiring new folks or filling roles left vacant.
7% think they’ll trim their insurance coverage.
And a tiny 7% foresee being less generous with coverage.

Bright side in the forecast

Despite the tax anxiety, most owners are still looking to the future with a forgiving grin. Nearly nine times as many firms expect revenue growth next year compared to those anticipating a drop. Here’s a quick snapshot:

53% foresee a revenue boost.
6% foresee a downturn.
15% think the bottom line will stay flat.
24% aren’t equipped to forecast.

Cash‑flow headaches keep rising

Late payments are still the culprit: 20% say the problem has worsened, 51% see no change, and a mere 7% think it’s improved.

And when it comes to borrowing, 15% feel it’s harder to get credit than it was at the start of 2021’s cost‑of‑living crisis.

Strategic moves that defy gloom

36% plan new products.
34% aim for new markets.
34% believe sharp cost cuts keep the top line healthy.
19% have recruited key talent to spark growth.

Those wary of a dip in revenue mainly blame the constant cost‑of‑living squeeze (40%) or the tax hike (35%). A third expects the economy to stall (30%). 26% admit some clients have gone out of business.

“We’re all juggling multiple irons in the furnace,”

Owen Thomas, Premium Credit’s Chief Sales Officer, summed it up: “The increase in Employers’ National Insurance is a big nail in the coffin for many firms that are planning to curb pay rises and halt recruitment. Credit limits and late bill payments still worry people, adding to the load. Yet, many remain optimistic about the next year thanks to new product launches, market expansion and cost‑cutting shenanigans. That resilience is the true story of the SME sector.”