What does the Autumn Budget mean for SMEs?
Revanth Challagalla, Senior Product Marketing Manager of cash flow products at Dojo, issued these comments following the announcement of the November 2025 budget from the Chancellor, Rachel Reeves:
“SME's are under immense pressure, and additional support is crucial. The November Budget remains a crucial moment for the UK’s 5.5 million small and medium-sized enterprises[1]. Many SMEs are already operating with tight margins, and the increase in employers’ National Insurance Contributions (NICs) and the minimum wage have created a challenging environment for investment or hiring.
The Budget includes measures to support micro-firms, such as the lowered tax rates for 750,000 retail, hospitality and leisure properties[1]. This change looks to improve business sentiment and help preserve jobs in these industries.
While these measures hope to offer some measure of relief, SMEs need predictability and stability. Constant changes in the UK economy risk undermining confidence and, without stable costs and a supportive tax environment, SMEs’ capacity to grow, invest and hire remains constrained.”
Business rates: A barrier to entry
“Many smaller businesses have been struggling with rising costs, particularly business rates. For new businesses, this can be a barrier to entry, while existing businesses are facing adverse cash flows. The Economic and Fiscal Outlook (EFO) notes that inflation in services will remain high into 2025-26, with CPI projected at 3.5% in 2025 and 2.5% in 2026, which only exacerbates these pressures [3].
However, in this Autumn Budget, the UK government has committed to permanently lower multipliers, especially for retail, hospitality and leisure sectors[1]. This change is intended to strengthen smaller businesses and help revitalise high streets. Yet, larger businesses, such as big department stores and hotels, may face significantly higher business rates due to a new, higher multiplier on high-value properties[1]."
National Minimum Wage increases by 4.1%
“The November budget has shared that the National Minimum Wage is set to rise by 4.1%, with the updated National Living Wage (for those 21+) reaching £12.71 per hour by April 2026[1].
This wage increase will result in higher payroll costs for businesses. Now, a full-time minimum-wage worker will cost employers approximately £900 more annually, and for every 10 full-time staff on minimum wage, the payroll bill will increase by £9,000. For businesses with 20–30 full-time equivalent staff, such as a café or restaurant, this could result in an additional £20,000 to £30,000 in payroll costs just to maintain the same staffing levels.[4]
This is a high additional cost for businesses, particularly in the hospitality and retail sectors, which are heavily reliant on part-time, lower-wage workers. While the rising wage is a win for employees, for small business owners and decision makers, raising wages could lead to job losses or reduced hiring, particularly in low-margin industries.”
How Dojo is supporting businesses
“With the November Budget bringing uncertainty for SMEs, due to rising labour costs and tax changes, the UK will see a shift in how businesses think about their finances. Having the ability to smooth cash flow, manage volatility and stay agile is no longer a luxury, but an essential for daily operations and growth.
The demand for accessible capital is higher than ever. Businesses need better support structures, whether that’s via government grants or innovations like Flex Funds. Giving merchants immediate access to their earnings isn't just about cash flow; it's about giving businesses the agility and control they need over their day-to-day operations to thrive in a demanding market.”
Sources
[1] https://www.gov.uk/government/collections/budget-2025
Methodology
[4] The figures were calculated by Dojo, applying the 4.1% increase to the current National Minimum Wage and National Living Wage. For the National Living Wage of £12.71 per hour (effective April 2026), the annual cost for a full-time worker (based on a 40-hour workweek for 52 weeks) was estimated. Then the impact on businesses was calculated by multiplying the increased cost per worker by the number of employees. For a business with 10–30 full-time employees, the payroll increase was derived by multiplying the per-worker cost increase by the number of staff.
About Dojo
Dojo is a UK-based card payment provider. They specialise in helping independent, small and medium businesses make secure, reliable and fast card payments with cutting-edge contactless card machines with next-working-day transfers.
