UK Chancellor Rachel Reeves faces a major setback as new data reveals that one in eight small and medium-sized enterprise leaders plan to relocate due to rising tax burdens. This comes just weeks before her Autumn Budget on November 26, 2025, sparking concerns about economic growth and business confidence in Britain.
Key Findings from the Latest Poll
A recent survey by investment firm Rathbones highlights growing frustration among UK business owners. The poll, conducted last month with over 1,000 SME founders and executives, shows clear signs of discontent.
It found that 12 percent of respondents, which translates to about 680,000 businesses from the UK’s total of 5.67 million SMEs, are actively considering moving themselves, their operations, or both abroad. This figure underscores a broader sentiment that the current tax environment stifles growth.
Beyond relocation plans, the survey uncovered other troubling trends. A significant 63 percent of SME owners believe the Labour government falls short in supporting business expansion. Additionally, 42 percent view overall government policies as unsupportive, adding fuel to debates about economic strategy.
Why Entrepreneurs Are Packing Up
Business leaders cite multiple reasons for their relocation plans, with taxes topping the list. Many point to anticipated hikes in national insurance, capital gains tax, and other levies that could squeeze profits and hinder investment.
For instance, recent reports indicate that proposed changes, such as a potential 20 percent exit tax on assets for those leaving the UK, have heightened fears. This policy, discussed in major outlets, aims to raise around 2 billion pounds but risks driving away wealthy entrepreneurs and their companies.
Economic pressures extend beyond taxes. High operational costs, regulatory burdens, and a perceived lack of incentives for growth contribute to the exodus. One business owner shared in online discussions that rising energy bills and staff costs make staying in the UK unsustainable for smaller firms.
The timing aligns with broader economic challenges. UK GDP growth stalled in the third quarter of 2025, with forecasts predicting flat or negative figures into early 2026. This environment amplifies worries that tax policies could deepen a per capita recession.
Top Destinations for Relocating UK Firms
SME leaders are eyeing countries with more favorable business climates. The poll breaks down preferred spots, showing a mix of nearby and distant options.
Here is a table summarizing the top choices based on the survey:
| Destination | Percentage of Respondents Choosing It |
|---|---|
| Ireland | 26% |
| Dubai | 21% |
| United States | 18% |
| Other European countries | 15% |
| Australia | 10% |
| Canada | 10% |
Ireland leads due to its low corporate tax rates and proximity to the UK. Dubai attracts with tax free zones and business friendly laws, while the US offers vast markets and innovation hubs.
Social media buzz, including posts from business influencers, echoes these preferences. Many highlight success stories of firms thriving after moves, such as tech startups relocating to Silicon Valley for better funding access.
Impact on the UK Economy
This potential brain drain could harm Britain’s economy in several ways. SMEs employ 16.7 million people and generate 2.4 trillion pounds in annual turnover, making them vital to national prosperity.
If even a fraction relocate, job losses and reduced tax revenue might follow. Experts warn of a doom loop where higher taxes lead to less growth, prompting more hikes. Former leaders like Tony Blair have cautioned against this cycle in recent statements.
On the flip side, some argue that reforms could stabilize public finances. The government faces a 22 billion pound fiscal gap, and measures like income tax adjustments or pension changes aim to fund essential services.
However, critics say these steps overlook SME needs. A separate study from the Resolution Foundation estimates that Reeves may need 26 billion pounds in tax rises, potentially worsening the situation for small businesses.
Recent events add context. In early November 2025, reports emerged of factories closing and moving abroad due to national insurance increases. Pubs and retail sectors report rising insolvencies, with over 4,700 at risk.
Government Response and Future Outlook
Officials defend the approach, emphasizing the need for balanced budgets to support public services. Reeves has signaled that everyone must contribute, but she has not ruled out further adjustments.
Labour pledges focus on growth, yet polls show skepticism. Two in five business owners express readiness to leave if taxes rise more, per additional surveys.
Looking ahead, the November 26 Budget will be pivotal. Analysts predict measures like a settling up charge for emigrants, aligning the UK with other G7 nations. This could generate funds but might accelerate departures.
Business groups call for relief, such as scrapping certain rates for retail and hospitality. Without changes, the trend could persist into 2026, affecting sectors from manufacturing to services.
What This Means for UK Entrepreneurs
For SME owners, the situation demands careful planning. Options include exploring tax efficient structures or lobbying for policy shifts.
Key steps to consider:
- Review your business taxes and seek advice on potential reliefs.
- Explore international opportunities, but weigh relocation costs.
- Engage with trade associations to voice concerns to policymakers.
As debates heat up, staying informed is crucial. Share your thoughts on how these tax changes affect your business, and join the conversation in the comments below.
