Business leaders, including BT’s chief executive Allison Kirkby, have warned ministers that high taxes and red tape risk deterring investment in the UK. Ms Kirkby, who says BT pays “ten times” more in “Government-inflicted costs” than competitors in other European countries, has urged ministers to reduce regulation and improve planning systems. Warning of the costs firms face in the UK, she highlighted the impact of business rates, energy levies and other costs associated with regulation and compliance. This comes ahead of November’s Budget and speculation that the Chancellor will raise taxes in an effort to plug a £40bn hole in the public finances.

Small British businesses are hesitant to invest due to economic uncertainty and fears of tax increases, according to Barclays. Confidence among SMEs dropped from 48% to 36% between Q3 2024 and Q2 2025, the survey shows, with the decline driven by rising costs and concerns over Government policy. Barclays estimates that if SMEs invested like larger firms, £60bn could be unlocked annually. Matt Hammerstein, chief executive of Barclays’ corporate bank, said: “Even small improvements in SMEs’ appetite to invest could have transformational impacts for the UK economy.”

The Institute for Government (IfG) has urged Labour to reconsider its tax strategy. Instead of targeting the wealthy, the think-tank suggests that Chancellor Rachel Reeves should increase taxes on the middle class, arguing that breaking a manifesto pledge not to touch income tax, VAT or National Insurance would be the “least economically damaging” way to tackle an estimated £30bn fiscal black hole. On calls for a wealth tax, the IfG said it would “be difficult and risky to raise substantial sums only from the very richest,” suggesting instead that tax increases should “fall on those with average incomes.” On the Chancellor’s options as the Budget nears, Tom Pope, deputy chief economist at the IfG, argues that “now is the time to commit to tax reform and lay out an agenda on tax that fits with her broader growth objectives.”

The Institute of Directors (IoD) has urged the Chancellor to raise income tax in her upcoming Budget. The IoD argues that increasing taxes is essential to restore credibility in the UK’s public finances. Anna Leach, the IoD’s chief economist, said that if ministers “politically cannot deliver spending cuts, it has got to be income tax increases,” adding: “We are going to have to knuckle down, get the public finances actually properly stable – because they are not considered to be by markets – then go hell for leather for growth.” Meanwhile, the Resolution Foundation urged Rachel Reeves to raise £6bn by shifting 2p of tax from employee National Insurance contributions onto income tax.

Around 80% of high-net-worth families anticipate tax increases in the coming year, according to the Saltus Wealth Index Report. This report surveyed over 2,000 individuals with investable assets of at least £250,000. While confidence in the economy has risen slightly, concerns about tax changes remain high. Mike Stimpson, a partner at Saltus, said: “Confidence in the UK economy is showing a degree of recovery… but this cohort are the wealth creators… if their confidence is undermined by continual uncertainty, that has consequences for everyone.”

John Roberts, chief executive of electrical goods retailer AO World, has warned that inflation, new regulation around hiring and higher taxes are pushing the UK into a recession. He said: “Costs walk into businesses on legs – those legs have got much more expensive. It is much more difficult to recruit people, it’s much less flexible than it has ever been to recruit people.” Questioning the Employment Rights Bill, he added: “We should be talking about job creation, not enforcing things that make business leaders think twice about recruiting people and about giving somebody a chance.” Voicing concern that higher taxes are driving wealth out of the country, Mr Roberts said: “You just can’t keep gearing the tax up. What you’ve got to do is run the country efficiently, you’ve got to take the tough decisions.”

Wealth manager Rathbones says high-net-worth clients are rearranging their estate planning to get ahead of potential changes in the Budget amid concerns that the Chancellor could launch a tax raid. The firm said interest in inheritance-related advice has “risen sharply” in recent months, with 43% of clients with £5m in investable assets expecting to need advice on estate planning in the next year. It has been suggested that the Treasury may look to cap the amount taxpayers are able to gift to family members during their lifetime without it being liable for inheritance tax, while officials are also set to bring pensions into the scope of inheritance tax in 2027. Simon Bashorun, head of advice at Rathbones Private Office, said: “Clients are understandably keen to get ahead of any potential changes, particularly around inheritance tax, gifting, and retirement planning.”

More than 5% of UK pubs may close next year, risking 12,000 jobs, according to a Centre for Economics and Business Research report. An estimated 378 pubs are expected to close in 2025 but this could rise to 2,200 in 2026. This comes with high business rates, alcohol duty, and increased National Insurance contributions hitting profitability. Analysis shows that pubs and bars account for 0.4% of UK turnover but pay 2.1% of all business rates. The British Beer and Pub Association says an overhaul of business rates represents a “once-in-a-generation opportunity” to rebalance the system.

HMRC’s wage bill for staff in compliance, preventing and detecting fraud cases and collecting taxes climbed to £1.5bn in 2024/25, marking a 23% increase since 2021/22. Analysis by the Parliament Street think-tank shows that there are 28,074 staff in the Customer Compliance Group (CCG). This is up on the 27,374 recorded in 2023/24 but down on the 28,699 seen in 2021/22. The fraud and investigation team within the CCG has seen overall pay increase by 24% over the past four years, having risen to £301m. In 2024/25, the team secured £48bn of tax revenue that would otherwise have been lost through error, fraud, and other forms of non-compliance.

Research by Skipton Building Society and Oxford Economics shows that 98% of adults living with their parents cannot afford to buy a house in their local area. Skipton chief executive Stuart Haire says “a generation has been locked out of home ownership and are being trapped at home,” describing this a “very jarring.” Mr Haire has warned that the economic activity associated with homebuying “is not flowing through the economy, which means the economy isn’t growing, which means the tax take isn’t growing.”