Budget: Small and Medium-sized Businesses

Lord Leigh of Hurley Excerpts

Thursday 27th November 2025 Lords Chamber

Asked by

[Lord Leigh of Hurley]

To ask His Majesty’s Government what assessment they have made of the effect of the Budget on small and medium-sized businesses.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, yesterday’s Budget rejects austerity, instead building a strong and secure economy—

[Lord Livermore (Lab)]

It does this by cutting the cost of living and reducing inflation, cutting NHS waiting lists and cutting government borrowing every year so interest rates keep falling. For small and medium-sized businesses, the Budget supports high streets with permanently lower tax rates for 750,000 retail and hospitality properties, backs entrepreneurs by doubling eligibility for tax breaks that make it easier for fast-growing start-ups to scale and stay in the UK, makes the training for under-25 apprenticeships completely free for SMEs and maintains the lowest rate of corporation tax in the G7.

[Lord Leigh of Hurley (Con)]

My Lords, yesterday was the benefits Budget. The Chancellor has broken her promise not to increase income taxes. As she said in her Budget, because no national insurance is charged on dividend income, she will increase the income tax on dividends. Does the Minister think that she understands that national insurance is on employed income, for which an employee is paid a risk-free salary, but SME dividends are the reward paid to people who take a risk and invest in their own business to help the business grow? For some reason—perhaps he can explain—she failed to put national insurance on the huge incomes of lawyers and others in LLPs. Does he share my concern, and that of many others in the UK, that she has no understanding whatever of basic economic principles such that she does not understand the difference between salary and dividends that SMEs get for return on capital?

[Lord Livermore (Lab)]

Unsurprisingly, no, I do not agree with the noble Lord. He will remember that, in the last five years of the previous Government, spending on welfare increased by £88 billion. The Government are taking action to ensure income from assets is taxed fairly, narrowing the gap between taxes paid on work and tax paid on income from assets. Those with dividend income pay considerably less tax than those whose income comes from employment or self-employment, as they do not pay national insurance contributions. It is not fair that the tax system treats different types of income so differently, so tax on dividend income will increase by two percentage points. Over 90% of UK taxpayers do not pay dividend tax.