• More than half of SMEs are concerned about upcoming tax rises
• Late payment of bills remains a problem for cashflow with one in five saying it is getting worse

New research* from the UK’s leading insurance premium finance company, Premium Credit, shows SMEs are planning pay and recruitment freezes in response to government tax rises including higher employer National Insurance contributions.

Research from Premium Credit’s Insurance Index, which monitors insurance buying and how it is financed, found more than half (52%) of SMEs are concerned about tax rises with 13% very concerned. Just 13% questioned were not concerned.

The study found they are more likely to limit pay rises – around a quarter (26%) said that is their most likely response - while nearly one in five (19%) said they are most likely to not replace staff who leave or not recruit. Just one in 14 (7%) said they were likely to cut back on insurance cover.

Despite worries about tax rises SMEs are optimistic about revenue growth in the year ahead with nearly nine times more firms expecting their revenues to grow rather than shrink in the next 12 months. More than half (53%) predict a rise in revenue compared to just 6% forecasting a fall. Around 15% questioned expect revenue to remain the same and 24% were unable to make a prediction.

One challenge for SME cashflow is late payment of invoices and bills – around one in five (20%) say the issue has worsened in the past 12 months, with 51% saying there has been no change and just 7% saying there has been an improvement.

SMEs’ ability to secure credit is also a constraint – around 15% say it has become harder to do so since the start of the cost of living crisis in 2021. Last year’s index** found 16% said the same and the 2023 index*** found that applied to 17%.

SME optimism about revenue is being driven by innovation with 36% planning to launch new products and 34% planning to launch into new markets. Around 34% are optimistic because of successful cost cutting and 19% say they have recruited key staff who will help drive growth.

Firms expecting a drop in revenue attribute it mainly to cost of living pressures continuing. Around 40% cited that as their reason for gloom while 35% say government tax rises will hit revenue and 30% expect the UK economy to stagnate. More than a quarter (26%) say some of their clients have gone bust.

Owen Thomas, Chief Sales Officer, at Premium Credit said: “SMEs are juggling a range of issues, with the increase in Employers’ National Insurance a major cause for concern among many firms which plan to limit pay rises and cut recruitment.

“Issues such as access to credit and late payment of bills remain a concern for firms and are adding to the pressure.

“However, despite this many are still optimistic about revenue growth in the year ahead with plans to expand through new product launches and growth in new markets. Many have also adapted and cut costs already underlining the resilience of the SME sector.”

(*) Independent research conducted by Viewsbank online among 988 SME owners and managers between March 7th and 11th 2025
(**) Independent research conducted by Viewsbank online among 1,332 SME owners and managers between March 22nd and 26th 2024
(***) Independent research conducted by Viewsbank online among 933 SME owners and managers between March 17th and 20th 2023