UK small business policy is broken. I do not say that as someone who reads about entrepreneurship in the papers. I say it as someone who has bootstrapped multiple businesses over twenty five years, hired people, paid taxes, navigated regulation and watched government after government announce initiatives that sound brilliant in a press release and achieve absolutely nothing on the ground.
Every few years we get a new minister with a new strategy. There will be a glossy PDF, some photo opportunities with founders who were already successful, and a handful of schemes with acronyms nobody can remember. Meanwhile, the actual problems that make starting and growing a business in this country harder than it needs to be remain completely untouched.
I am not anti government. I am not even particularly political in the tribal sense. But I am bloody frustrated, and I think most founders I know feel the same way.
The tax system punishes growth
Let me start with the one that drives me up the wall. The UK tax system is not designed for small businesses. It is designed for large corporations with accounting departments, and small businesses are expected to navigate the same complexity with a fraction of the resources.
Corporation tax going up to 25% hit growing businesses hardest. Not the startups making no money and not the giants with armies of tax planners. It hit the businesses in the middle, the ones turning over a few hundred thousand to a few million, employing five to fifty people, actually creating jobs in their communities. Those businesses felt every penny of that increase.
Then there is the VAT threshold. Hitting the 90,000 pound mark should feel like a milestone. Instead it feels like falling off a cliff. Suddenly you need to charge 20% more or absorb the hit yourself. I have spoken to business owners who deliberately slow their growth to stay under the threshold. Think about that for a second. The tax system is actively incentivising businesses not to grow. That is insane.
And do not get me started on Making Tax Digital. The idea is fine. Digital record keeping makes sense. But the implementation has been a rolling disaster that has cost small businesses thousands in software and accountancy fees for what is essentially the government's convenience, not ours.
Regulation written by people who have never run a business
I genuinely believe that most business regulation in this country is written by people who have never had to make payroll on a Friday afternoon. There is a disconnect between the intention of regulation and the reality of complying with it when you are a small team trying to do a hundred things at once.
Employment law is a good example. I am absolutely in favour of workers' rights. I have always tried to be a good employer and treat people fairly. But the complexity of employment law in the UK is staggering for a small business. The amount of documentation, process and legal risk involved in hiring someone, managing their performance and, if necessary, letting them go is wildly disproportionate to what a five person company can reasonably manage.
Large companies have HR departments and employment lawyers on retainer. Small businesses have a founder who is also the salesperson, the product manager, the customer support team and now apparently needs to be an employment law expert as well. The rules should protect workers without requiring a law degree to understand them.
GDPR compliance is another one. Again, I support the principle. People should have control over their data. But the practical burden on a small SaaS business trying to comply with GDPR properly is enormous. Privacy policies, data processing agreements, cookie consent mechanisms, subject access request procedures. When I built CampSuite, I spent weeks on GDPR compliance that could have been spent building features that actually helped our customers.
Government support that does not actually support
Every government loves to talk about how much they support small businesses and entrepreneurs. The reality is rather different.
Innovation grants sound fantastic until you actually try to apply for one. I have been through the process multiple times. It takes weeks to prepare an application, the criteria are vague, the feedback when you are rejected is useless and the success rate is low enough that the time investment rarely makes sense. For a bootstrapped founder, those weeks could have been spent building product or talking to customers. The opportunity cost is real.
The Start Up Loans scheme is well intentioned but the amounts are too small for most tech businesses and the interest rates, while reasonable, still represent debt for businesses that might not see revenue for months. Compare this to what countries like Estonia, Singapore or even France are doing for tech startups and we look embarrassingly behind.
Business rates remain a disaster for anyone with physical premises. The system is ancient, the valuations are opaque and the relief schemes change so frequently that nobody knows what they are entitled to. For online businesses this is less of an issue, but for the mixed model businesses that form the backbone of most UK high streets, it is crippling.
The skills gap nobody wants to fix properly
This one is personal because I work in technology and I see it every day. The UK has a massive skills gap in software development, data, cybersecurity and pretty much every technical discipline. We talk about it constantly. We have been talking about it for at least a decade. And yet the situation is barely improving.
The apprenticeship levy was supposed to help. Instead it created a bureaucratic nightmare that large companies game to fund management training courses and small companies mostly ignore because the administration is not worth the hassle. I have looked into hiring apprentices for my businesses several times and the process is so convoluted that I have given up and hired graduates instead every time.
University computer science degrees are another sore point. I have interviewed hundreds of CS graduates over the years and the gap between what they learn and what they need to know to be productive in a real business is huge. Most cannot use version control properly. Many have never worked on a codebase with more than a few files. Almost none understand deployment, testing or working in a team. Universities are producing theorists when industry needs practitioners.
What we actually need is a serious investment in vocational coding education. Not everyone needs a three year degree to become a productive developer. Intensive bootcamps, industry partnerships and paid training programmes would fill the gap faster and more effectively. But that is not glamorous enough for a policy announcement, so instead we get another round of funding for AI research that will benefit about twelve companies.
What would actually help
I am not just here to moan. I have been thinking about this for years and I have some specific ideas about what would genuinely make a difference for small businesses and entrepreneurs in the UK.
First, simplify the tax system for small businesses. A single, lower rate of corporation tax for businesses under a certain revenue threshold. A graduated VAT system instead of the cliff edge. Quarterly tax returns with a simple online form that does not require an accountant to complete. The technology exists to make this happen. The political will does not.
Second, create a regulatory sandbox for small businesses. Give companies under a certain size a simplified compliance framework for their first three years of trading. Not no regulation, but proportionate regulation. Let them focus on surviving and growing before loading them with the full weight of compliance that was designed for much larger organisations.
Third, reform the apprenticeship levy into something that actually works for small businesses. Make it simple to hire and train technical apprentices. Fund the training directly rather than creating a marketplace of training providers of wildly variable quality. And for the love of everything, reduce the paperwork.
Fourth, invest properly in regional tech ecosystems. London gets everything. Manchester, Leeds, Birmingham, Bristol and Edinburgh have thriving tech scenes that exist despite government policy, not because of it. Put serious money into regional tech hubs, coworking spaces and networking infrastructure outside London. The talent is there. The opportunity is there. The support is not.
Fifth, listen to actual small business owners instead of just the lobby groups. The Federation of Small Businesses does good work, but the government needs to hear from the people in the trenches. Set up proper advisory panels of current founders, not retired ones. Not consultants. Not academics. People who are currently trying to build businesses and deal with this stuff every day.
Why this matters
Small businesses employ over sixteen million people in the UK. They account for more than half of all private sector turnover. They are not a niche interest group. They are the economy. When we make it harder to start and grow businesses, we are making the country poorer in the most literal sense.
I have built businesses that created jobs, paid taxes and solved real problems for real people. I did it without grants, without government support and often in spite of the regulatory environment rather than because of it. Imagine what would be possible if the system actually worked for us instead of against us.
The next time a politician stands up and says they are the party of business, ask them what they have actually done to make it easier to start one. Ask them if they have ever had to register for VAT, navigate auto enrolment pensions for a three person company, or spend two grand on legal advice just to fire someone who was not doing their job. I suspect you will get a very blank look.
If you are a founder dealing with any of this, I feel you. And if you want to talk about how to navigate the mess, my consulting services include helping businesses deal with exactly these kinds of growing pains. Sometimes it helps to talk to someone who has been through it before.
