One-Third of UK SMB Owners Losing Sleep Over Paying Staff, Survey Finds

London, UK – 19th March, 2025. According to research from Dext1, the leading bookkeeping automation platform provider, one-third (33%) of the UK’s small and medium-sized business (SMB) owners2 are losing sleep over paying staff. Ahead of speculated tax hikes from this month’s Spring Statement and employment costs set to rise in April following the Autumn Budget, the figures reveal the alarming extent of financial strain on SMB owners as they navigate the potential hit on their profits and cash flow.

The data, which features survey responses from more than 500 UK SMB owners as well as 100 accountants and bookkeepers, ranks rising salary costs (43%) and tax liabilities (39%) in the top five worries for SMB owners’ cash flow. With nearly two-thirds (61%) of entrepreneurs citing cash flow issues as a source of significant stress, it is resulting in nearly half (44%) of SMB owners being kept up at night, highlighting the increasing pressure on SMBs in the current financial climate.

Speaking on the findings, Sabby Gill, CEO at Dext, says, “For SMB owners, cash flow is already a major pain point in even the most steady economic period but as the data indicates, the prospect of increasing labor costs is inflicting an unprecedented burden on entrepreneurs. With the Spring Statement approaching, we urge the Government to use this as an opportunity to introduce meaningful support for SMBs to successfully navigate already challenging conditions, rather than drive more change that will negatively impact growth.

“There’s a limited influence SMB owners hold over the fiscal shocks which may come their way this month however, they are in control of how they respond to them. Now more than ever, they must be proactive in planning for a host of different scenarios, leveraging every resource at their disposal - from real-time financial information to digital tools - to ensure they’re not only agile in their decision-making, but well-informed.”

From April 1, National Insurance (NI) contributions will rise by 1.2% with thresholds lowered from £9,100 to £5,000, however, businesses are also set to receive an increase in the employment allowance from £5,000 to £10,500. Alongside these changes, the national living wage will experience a 6.7% rise to £12.21 per hour as part of wider government policies to not only fill its estimated £40bn tax shortfall, but tackle the UK’s cost-of-living crisis. With the average salary bill for UK SMBs over £625,000 per annum, the new measures could result in an increase of nearly £42,0003 in annual employment costs for the average small business.

As businesses respond to these measures, a Q4 2024 poll from the Federation of Small Businesses (FSB) revealed a third (33%) of companies expect to reduce their workforces over rising staff costs - nearly double the figure from the previous quarter (17%). With forecasts in October 2024 from the Office for Budget Responsibility (OBR) suggesting progress made from the Autumn Budget for the government to reach its fiscal targets in 2029-30 have been erased, the upcoming Spring Statement could result in additional tax rises, further impacting confidence amongst businesses in the UK economy.

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About the research

1 The research was conducted by Censuswide, among a sample of 500 SME leaders and 100 Accountants/Bookkeepers (aged 18+) across the UK. The data was collected between 22.11.2024 - 27.11.2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.

2 From results of survey [22.11.2024 – 27.11.2024]. Respondents demographic profile determined by natural fall out as there is no reliable data available to represent the national population. All data based on this survey unless otherwise stated.

3 Figure from average salary bill of £625,000 and 6.7% increase in national living wage = £41,875

About Dext:

Dext, part of the IRIS Software Group, is the world’s leading provider of AI-powered bookkeeping automation. Since 2010, Dext has empowered accountants, bookkeepers, and businesses to thrive by eliminating the manual work that slows them down. Its advanced AI, trained on more than 1 billion receipts and invoices with 99.5% accuracy, streamlines the capture, coding, publishing, and reconciliation of financial data, giving professionals more time to add value and grow.

Trusted by over 12,000 accounting and bookkeeping firms and 700,000 businesses worldwide, Dext integrates seamlessly with all major accounting software and connects to more than 11,500 banks, suppliers, and marketplaces. As part of IRIS Software Group since 2024, Dext continues to innovate with its clients to deliver a more seamless, end-to-end accountancy workflow that enables smarter, more timely financial decisions.

For more information, visit www.dext.com