This is a searchable reading copy of Reform UK’s original policy document. The wording below is reproduced from the source document; formatting has been simplified for web reading.
CONTRACT WITH
SMALL BUSINESS
Reform’s Contract with Small Business
1. Small and medium businesses are the lifeblood of the British economy. Together,
the United Kingdom’s 5.7 million small-to-medium enterprises employ 16.9 million
people, provide life to our high streets, deliver much needed services to us all, and – if
everything goes well – make money for the entrepreneurs that started them.
2. A Reform UK Government will always back British business. Unlike Labour’s SW1-
stacked Cabinet, many of our MPs and candidates have been successful businessmen
and women in their own right. We are not ashamed of business; we are not ashamed
of success. We understand the challenges that face business owners every day, as
they take the risks needed for this country to grow.
3. This contract represents our commitment to you, the small businesses of Britain. It
contains concrete policies that we will deliver in government to help you grow and
succeed. In particular, we promise to:
a. Make Tax Fairer and Easier by increasing the VAT threshold to £150,000, introducing
a Hard Work Bonus by removing tax on overtime, reversing Rachel Reeves’s
Inheritance Tax raid on family farms and small businesses, and introducing ‘delay
repay’ for HMRC backlogs, so the Revenue is incentivised to treat taxpayers with
respect;
b. Reduce the Cost of Hiring by abolishing Labour’s jobs tax on British workers,
providing Apprenticeship Wage Credits and Apprenticeship Retention Bonuses,
and reversing the onerous employment regulations Labour have introduced, that
have only made it harder to take people on;
c. Cut the Cost of Fuel and Energy by ending the Net Zero policies that are driving
up bills and permanently scrapping the 5p rise in fuel duty;
d. Unlock Access to Finance and Mentoring by allowing the parents and grandparents
of entrepreneurs to make modest tax-favoured investments in their relative’s small
businesses, to ensure those without connections to investors can access capital,
and reducing the liabilities facing Non-Executive Directors of small businesses, so
entrepreneurs can get mentors when they need them most; and,
e. Ease the Regulatory Burden by repealing the European General Data Protection
Regulation (GDPR) that is suffocating our tech sector and scrapping the electric
vehicle mandates for cars and vans.
4. In return, all that we ask is that Britain’s small businesses keep treating workers
well, keep taking risks, and keep making the United Kingdom wealthier. A Reform
government will get out of their way as they do so.
5. Reform is proud to back British business, and we are proud that so many British
businesses back us. If you are ambitious for this country, and for your business, join us.
Signed By: ______________ ______________ ______________
Nigel Farage Richard Tice Robert Jenrick
Leader of Reform UK Deputy Leader of Reform UK Reform UK Shadow Chancellor
Shadow Secretary of BTE
4
CONTENTS
Where We Are 6
Make Tax Fairer and Easier 7
» Increasing the VAT Threshold 7
» Introducing the Hard Work Bonus 7
» Scrapping Rachel Reeves’s Death Tax on Family Farms and Family Businesses 7
» Introducing ‘Delay Repay’ for HMRC Backlogs 8
Reduce the Cost of Hiring 10
» Abolishing Labour’s Jobs Tax on British Workers 10
» Providing Apprenticeship Wage Credits and Apprenticeship Retention Bonuses 10
» Reversing the So-Called Employment Rights Act 11
Cut the Cost of Fuel and Energy 12
Unlock Access to Finance and Mentoring 13
» Allowing Relatives to Make Tax-Favoured Investments in SMEs 13
» Reducing the Obligations on SME Non-Executive Directors 14
Ease the Regulatory Burden 15
» Repealing and Replacing the UK GDPR 15
» Scrapping the Electric Vehicle Mandates 15
Conclusion 17
Appendix 18
Endnotes 19
5
Where We Are
Britain’s small businesses are struggling. Less than a fifth – the lowest share on record –
expect to grow over the next 12 months. Almost twice as many expect to shrink, sell up or
close altogether.1
This is not just a post-Covid phenomenon. Britain has become less dynamic over the past
twenty years. In the early 2000s, the ‘job reallocation rate’, which measures how often we
switch jobs, was about 50% higher than it is today.2 Since 2010, the number of private-
sector businesses has risen by around one million, but 80% of that increase has come from
businesses with no employees at all.3 Today, the United Kingdom has 5.64 million small
businesses, but just 38,435 medium-sized ones.
And the troubles do not stop as a business grows. The ladder from small business to large
British company is increasingly broken. At its peak in 2007, 1,694 companies were listed on
AIM – London’s stock market designed for growing businesses. By November 2025, just 634
remained.4 The wider London market is shrinking too: 213 British companies have delisted
from the London Stock Exchange since 2016.5
Successive governments – both Labour and Tory – are to blame. Each new tax, each new
regulation makes it successively harder to run a business. Roughly half of small businesses
cite regulation as a barrier to their success.6 The average small business owner spends more
than a full working week each year just on tax compliance.7 Individually, every new form,
employment right or tax rise might sound modest. Together, they crush Britain’s innate
entrepreneurial spirit.
The Conservatives talked endlessly about cutting red tape, but too often they did the
opposite. While supposedly focused on a Business Impact Target, the Coalition government
oversaw £8.3 billion of new regulatory costs that went uncounted.8 It was the last Conservative
government that raised the main rate of Corporation Tax from 19% to 25%, reversing much
of the improvement since Gordon Brown was chancellor. Even much of Labour’s disastrous
Renters’ Rights Act was first written by the Conservatives.
Labour then made matters worse. Rachel Reeves increased employer National Insurance from
13.8% to 15%. Then, Labour followed this up with the Employment Rights Act, which even
the Government’s own analysis explicitly admits will cost small businesses more.9 They also
removed the protections for family businesses and farms from inheritance tax, potentially
forcing many families to sell up after generations.
Businesses have responded exactly as common sense dictates. Job vacancies have fallen to
707,000, their lowest level in more than five years, with the ONS reporting that smaller firms
are cutting back recruitment because of labour and operating costs.10 Small businesses are
being asked to hire more young people, train more apprentices, invest more and grow faster
– while Labour makes just surviving more expensive.
Britain’s entrepreneurial spirit created the Industrial Revolution. And it is not dead yet:
Despite everything, more than 300,000 new businesses are started every year.11 But if the
United Kingdom is to grow, we cannot allow these firms to wither on the vine. This is Reform’s
plan to rescue them from years of state neglect.
6
Make Tax Fairer and Easier
Increasing the VAT Threshold
Reform UK will raise the VAT registration threshold from £90,000 to £150,000, rising
with inflation. This costs £2.4 billion a year, but this is not money lost to the economy; it
stays with the tradesmen who earn it and the households who hire them. Around 44,000
firms currently cap their revenue below £90,000 and roughly 280,000 turn over between
£90,000 and £150,000. That is 320,000 sole traders and small businesses benefiting almost
immediately.12 In 2024-25 around £133 billion of net VAT, roughly three quarters of the total,
came from traders turning over more than £10 million.13
The ceiling is based on turnover, not profit. £90,000 sounds like a lot, but after materials,
labour and vehicle costs a tradesman could easily only keep £30,000 or less. Yet when
his turnover exceeds £90,000 he must charge 20% VAT on everything he supplies. He can
absorb the cost, but will lose thousands in take home pay. The burden falls hardest on those
serving domestic customers, as they will have to charge their customers an additional 20%,
which they cannot reclaim
Since 2017, prices have risen by more than a third while the threshold has risen by just £5,000.
This is taxation by stealth.
The OBR projects 44,000 firms capping turnover just below the line with £350 million of
output lost every year.14 It is not only about the money. Small VAT registered businesses
spend an average of three days a year on VAT paperwork.15 This is a tax on the time of the
people who have least of it.
This applies to the white van man who takes a month off to stay below the line, to the
hairdresser turning clients away and the coffee shop closing early to hold down its revenue.
From florists to pedicurists, lifting the threshold lets them grow.
Introducing the Hard Work Bonus
Under Reform’s Hard Work Bonus, employees earning under £75,000 would pay no income
tax on overtime worked above a 40-hour week.
That will make life much easier for small businesses, as they can get more out of their existing
staff. Without any cost to the business, this tax cut will increase an employee’s net hourly pay
by 25-67%, if they choose to take an extra shift.
For someone working in a warehouse on an industrial estate in the North East, they could
keep £700 more a year. This is based on a 40-hour contracted week, working an extra 6
hours of overtime each week. Under Reform’s policy they would keep £2.50 extra for every
hour of overtime worked.
That matters particularly for small businesses, which can’t keep spare employees on the
payroll just to cover busy periods. A pub facing a busy weekend, a manufacturer dealing
with a large order, or a trades business trying to finish a job could, helped by the Bonus,
incentivise existing staff to work longer rather than turning away business or scrambling to
find extra staff to cover.
Scrapping Rachel Reeves’s Death Tax on Family Farms and Family Business
In her 2024 Autumn Budget, Rachel Reeves took the axe to Agricultural Property Relief
(APR) and Business Property Relief (BPR), substantially limiting the protection given to
qualifying farms and family businesses from Inheritance Tax. Under Reeves’s policy and
her subsequent partial u-turn, each person gets 100% relief on only the first £2.5 million of
7
qualifying agricultural and business assets; above that, relief falls to 50%, leaving an effective
20% inheritance-tax charge. The allowance can be transferred between spouses, giving a
couple up to £5 million of full relief, but this still catches many farms and firms of relatively
modest size.
This new death tax will destroy successful medium-sized businesses. Each year about 1,100
families will be hit with a higher tax bill, averaging £273,000 each by 2029/30.16 Such a bill
could force a family to sell up, even if a descendant wanted to take over the farm or firm and
even if it was an inopportune moment to sell. Moreover, these rules – when layered on top
of the already high taxes that business owners pay – blunt the incentives to grow a business,
especially as an owner ages.
There is a good reason to treat farms and privately-held businesses differently for IHT
purposes. They often spin off less cash than other investments, especially if the owner is
reinvesting. This often means that a hard-earned family asset must be sold to satisfy a tax
bill. However, unlike financial assets, family businesses and farms are harder to sell in pieces,
without making them unviable or selling at fire-sale prices. This means that the economic
damage caused per pound raised from taxing such farms and firms on death is higher than
for other assets, not to mention the emotional cost of forcing families to part with the farm
and businesses built up by their parents and grandparents before they are ready.
So Reform would reverse Labour’s death tax on family farms and firms, by reinstating
uncapped APR and BPR. This would protect the farms and firms that families have built up
over generations.
Introducing ‘Delay Repay’ for HMRC Backlogs
According to the Federation of Small Businesses, the average small business owner spends
44 hours and £4,500 a year on complying with tax laws. That is up 10% from 2021.17
These burdens are made worse by HMRC’s abominable customer service record. In 2023/24,
fewer than half of calls made to HMRC were answered by an adviser, while taxpayers waited
an average of 23 minutes – up from 5 minutes in 2018/19. Almost 50,000 calls were ended by
HMRC – without the taxpayer being helped – because they exceeded their maximum waiting
time of 70 minutes.18 This means that, during 2023/24, HMRC wasted 14 million hours of
taxpayers’ time on the phone – or £275 million in wasted productivity.19
While it treats ordinary taxpayers with contempt, HMRC rolls out the red carpet for the
favoured few. Members of Parliament, the Royal Family, and (remarkably) transgender
people have access to a dedicated phone line. Calls to this line are typically answered twice
as fast as general calls.20 Special protections for privacy may be necessary for those in public
life, but a fast-track is unfair.
Reform would require HMRC to respect every taxpayer’s time, regardless of their status or
gender identity. Our objective is to reduce the share of callers waiting for more than 30
minutes to under 5%.
To achieve this, we would give taxpayers a tax credit of £30 off their tax bill if HMRC took
more than half an hour to answer their phone call. We would also tie the pay of senior HMRC
officials to their customer service performance, in line with Danny Kruger’s civil service
reform proposals. Robert Jenrick, as Chancellor, would monitor HMRC’s performance against
this target regularly.
The net cost to the Exchequer of this policy depends on how effectively HMRC fixes their
response times and how it changes caller behaviour. If we achieve our objective while also
reducing call abandonment by 50%, we estimate the tax credit would cost the Treasury £70
million. To prevent abuse, the tax credit would be limited to two occasions in a given tax year
and only given as a non-refundable tax credit, so only taxpayers would receive it.
8
The cost of any required adjustments would be met from within HMRC’s departmental baseline.
After all, serving taxpayers and collecting revenue is the entire point of the organisation. In
particular, there are a number of adjustments HMRC could make to reduce call wait-times
that would also improve taxpayers’ experiences. For instance, it could allow small businesses
to negotiate debt repayment plans in writing, rather than insisting that negotiations occur
over the phone, if they so chose.21 Similarly, it could keep cases assigned to the same case
manager for longer, to avoid time wasted as each new manager familiarises themselves with
the details.
9
Reduce the Cost of Hiring
Abolishing Labour’s Jobs Tax on British Workers
Labour’s rise in employer National Insurance is a tax on taking a chance: on giving a young
worker their first job, or expanding to another location. It is little surprise that job vacancies
are now at a 5-year low, led by a collapse in small business hiring.22
Reform is the only major political party to commit to reversing Rachel Reeves’ jobs tax for
British workers. We would cut the employer NIC rate from 15% back to 13.8%.23 For Britain’s
small businesses, that directly reduces the cost of creating jobs and growing a business.
This reversal would be fully-funded by a new Employers’ Migrant Labour Levy. Instead of
making every new hire more expensive, Reform will make it cheaper for a local café, builder
or manufacturer to employ a British worker, while increasing the cost of relying on imported
labour. In addition to our apprenticeship programme and reversal of the Employment Rights
Act, this will give firms the means and opportunity to train and hire the nearly one million
young people currently outside work, education or training.
Providing Apprenticeship Wage Credits and Apprenticeship Retention Bonuses
Since 2017, apprenticeship starts have fallen 40% in manufacturing and engineering.24
Meanwhile, firms’ workforces are ageing and starting to retire. This is a slow motion crisis for
Britain’s skilled trades.
However, we know that taking on an apprentice is a risky investment for a small business. You
have to pay the apprentice before they become productive, experienced staff have to spend
time training them, and there is always the danger that they leave for your competitor, once
they are fully qualified.
So, Reform would introduce a 30% Apprenticeship Wage Credit for firms with annual pay bills
below £3 million. The business would receive 30% of a 16-18-year-old apprentice’s statutory
minimum wage back from the Government. That is worth about £4,742 a year, or roughly
£8,300 over a typical apprenticeship. Unlike existing support, which largely pays for formal
training, the money goes directly towards the employer’s wage cost.
We would also tackle the fear that a small firm spends years training someone only to lose
them immediately afterwards. Under a Reform Government, an apprentice who remains with
the same small employer for two years after qualifying would receive a £2,000 retention
bonus. The payment goes to the worker, but it would make the investment much less risky
for the employer.
Perhaps just as important for very small firms, Reform would also strip away some of the
bureaucracy around apprenticeships. Qualifying employers would be allowed to provide
training themselves rather than having to organise an outside training provider; employers
would get more discretion over entry requirements and English and maths qualifications;
and the Apprenticeship Service would be replaced with a simpler one-stop system that
automatically applies grants and bursaries for which the firm qualifies.
10
Reversing the So-Called Employment Rights Act
Reform will scrap Labour’s so-called Employment Rights Act. The effects of this new law
are particularly felt by small businesses, who are least able to deal with the plethora of new
administrative costs and the risks imposed by new Day-1 rights. One section of the Act alone
– which requires businesses to allow trade unions onto their premises, even if they are not
affiliated – could cost SMEs £600 million.25
The title of the Act may sound nice, but these obligations all add to the cost of hiring.
That will necessarily result in lower wages and higher unemployment for workers, as well as
stunting the growth of small businesses.
11
Cut the Cost of Fuel and Energy
Britain’s electricity prices for industry are the highest in Europe – and are almost twice those
paid by French firms.26 Subsidies and grid integration costs for green energy are expected
to cost £40 billion a year by 2030.27 Our gas prices are also much higher than in other gas
producing countries, such as Canada and the United States.28
Unsurprisingly, therefore, three-in-five British businesses cite the price of energy as a concern
facing their business. One-in-ten say it is their single largest concern.29 High energy prices
have already killed off much of the British chemicals sector – and they are threatening to do
the same to the manufacturing industry too.30
Reform will scrap the Net Zero rules that are driving these costs up. We will enable and
encourage further drilling in the North Sea, so we are extracting more of our own domestic
gas. That will reduce our reliance on expensive LNG from the Middle East and America. We
will scrap the Renewables Obligations and green levies that drive up business bills. In line
with our notification to the energy companies, we will consider AR7 CFDs to be illegitimate
given they lock in exorbitant prices for wind power for decades to come.
We will also permanently scrap the forthcoming 5p increase to fuel duty. In March 2022, fuel
duty was cut by 5p. Rachel Reeves extended this cut until the end of 2026, but it is scheduled
to end, putting fuel prices up by 5p at the beginning of January 2027. Reform will make the
5p cut permanent, ending the uncertainty for businesses.
12
Unlock Access to Finance and Mentoring
Entrepreneurs cannot do it alone. Most businesses eventually require some external funding,
especially new start-ups. Many also seek support from external mentors, including Non-
Executive Directors who help to make sure companies are well-run as they grow larger. But
an accumulation of rules under both the Tories and Labour have made accessing both ever-
more difficult for many British small businesses.
Allowing Relatives to Make Tax-Favoured Investments in SMEs
The credit crunch for British business didn’t end in 2011. After adjusting for inflation, private
business credit today in the UK is still 15% lower than its 2008 peak. By contrast, in the US,
business credit had recovered by 2011.31 This has hit small businesses particularly hard: In
2024, Britain’s banks had £179 billion – or 6.2% of GDP – in loans outstanding to small and
medium businesses. Despite years of inflation and some economic growth, that is down from
2011, when banks had £189 bn in outstanding SME loans – or 11.3% of GDP.32
If banks won’t lend to small businesses, they need equity investment from elsewhere. At the
moment, this is supported through the tax system but not if the investment comes from a
close relative. For instance, start-ups can raise up to £250,000 through the Seed Enterprise
Investment Scheme. SEIS investors can write 50% of their investment off their income taxes,
and, if they hold their shares for more than three years, they are exempt from Capital Gains
Tax. The Enterprise Investment Scheme offers slightly less generous support, but is available
for more businesses and up to a larger investment. However, close relatives (i.e., partners,
children, parents, or grandparents) of the business owner are not eligible for EIS or SEIS.
That means, if your golf partner invests in your business, he gets a tax write-off; but if your
grandmother does the same, she gets nothing. That is obviously unfair, and it robs many
people of opportunity.
After all, not everyone has wealthy friends who can invest in their businesses. Most small
businesses that receive external funding get it from close relatives.33 Relatives are perhaps
the best investors in a small early-stage company: They know the entrepreneur, so they’re
not going in blind, and the entrepreneur has a strong incentive to treat their money with
respect.
This rule is also particularly problematic as younger people take longer to accumulate assets.
In an age of shorter life expectancies, people often funded businesses out of the small
inheritances their parents or grandparents left them. Happily, today, most people’s parents
and grandparents will live long lives into their adulthood. If those parents or grandparents
want to bring some of their inheritance forward and invest in a growing business, we should
treat them no worse than an unrelated investor. Similarly, far fewer would-be young small
businesspeople have equity in their homes to borrow against, as home ownership rates have
fallen. This has historically been a primary source of small business capital – and, as it dries
up, we need to find a replacement.
To make sure more entrepreneurs can access capital, Reform will expand the eligibility for
SEIS to allow parents and grandparents to invest in small businesses and receive tax relief. We
would do this subject to anti-avoidance rules to ensure that entrepreneurs could not funnel
their own money through their relatives to avoid tax. If this worked to increase investment
and once the anti-avoidance rules were perfected, we would expand this policy to EIS, as
well, which would open it to more established companies.
The cost of this policy naturally depends on the level of uptake, as well as how much tax the
investor would have paid otherwise. Roughly twice as many entrepreneurs receive funding
from close family as from private investors. However, tripling SEIS costs would substantially
overstate the cost of this policy: This is because many current SEIS claimants will not be
13
professional investors,34 but friends of the entrepreneur. Moreover, family claimants may
invest less in each transaction and may not have sufficient taxable income to take the full
relief, so the foregone tax revenue per investment will be smaller. Our central estimate is that
this policy might increase the cost of SEIS by 50%.
Currently, SEIS costs £125 million per year in foregone Capital Gains Tax and Income Tax
receipts.35 Therefore, our central estimate of the additional cost is £63 million per year.
Reducing the Obligations on SME Non-Executive Directors
Non-executive directors are a classic part of how large public companies are run. They are
directors who sit on a company’s board but do not manage it day-to-day. They are meant to
protect the interests of shareholders against managers.
However, smaller businesses have increasingly seen value in the non-executive director role,
even when ownership and control of the business remain in the same hands. A good non-
executive director can be a ‘critical friend’ to the management team, especially as a business
grows and faces challenges that are outside the expertise of the founder. Often, they are an
entrepreneur themselves, who has done it before and can provide invaluable mentorship to
the founder.
Unfortunately, every time the Conservatives or Labour wanted to signal a particular virtue,
they heaped another duty on company directors. Today, British law imposes such draconian
responsibilities on non-executive directors that many talented people do not want to take
the risk of helping out. Under current law, a director without any management responsibility
can be held personally liable if a company files its accounts late, breaks ‘modern slavery’
rules, or violates environmental law. In such a circumstance, many decide it is just not worth
the risk. And it shows: 96% of firms surveyed by BDO and Norman Broadbent struggled to
find NED talent.36
Reform would amend the Companies Act to establish a new category of ‘small company non-
executive director’, defined as a director without day-to-day management responsibilities in
a firm that meets the Companies Act definition of a small business (i.e., any two of an annual
turnover no more than £15 million, a balance sheet total no more than £7.5 million, and no
more than 50 employees on average). Personal civil liability for these directors would be
capped at three times their annual directors’ fee or £50,000, whichever was higher. This
would allow the level of responsibility to scale with the size of the firm. It would not exempt
the directors from criminal liability, including for hiring illegal migrants under a Reform
government. The section 174 duty of care would also be clarified, so that it was clear that
such directors’ duties were largely supervisory.
14
Ease the Regulatory Burden
Repealing and Replacing the UK GDPR
More than half of Britain’s ‘innovative’ small businesses say they struggle with the GDPR.37
This is a stringent EU privacy law that has been retained as British law since Brexit. It has
been amended since, but it remains too strict.
At its core, the GDPR reverses the traditional British rule that ‘an action is legal unless it is
explicitly illegal’. Under the GDPR, every company – no matter how small or low-tech – has
to identify the ‘lawful basis’ on which it collects or processes information. Even compiling
public information, such as a list of possible business customers’ emails, can be considered
‘data processing’ and create privacy obligations. Every form is meant to come with a long
list of privacy information. It is also behind (together with the Privacy and Electronic
Communications Regulations) the annoying cookie banners at the top of every website.
The GDPR is an annoyance for many firms, but it is existential for the software industry.
Economists have found that the GDPR cut venture investment in European tech firms by a
full 25%, compared to their American competitors.38 It also halved the number of new apps
being added to the Google Play Store from Europe, including the UK.39
Many countries manage to protect privacy without the GDPR. Indeed, fifteen countries are
recognised as having ‘adequate’ data protection even by the European Commission. New
Zealand probably has the lightest-touch privacy regime of any of these.
Under New Zealand’s Privacy Act 2020, there is no GDPR-style requirement to fit every act
of processing into one of a prescribed set of ‘lawful bases’. Instead, the law is built around
13 broad privacy principles. Businesses may collect personal information that they need, but
they must collect it fairly and keep it secure, and generally must use or disclose it only for
the purpose for which it was obtained or a directly related purpose. The regime still requires
firms to notify people of serious data breaches and to give them (reasonable) access to
their own information. But it does without the GDPR’s elaborate system of legal bases and
turnover-linked administrative penalties. This makes it much easier to comply with, especially
for small businesses without a legal budget.
Reform would scrap the GDPR and replace it with a New Zealand-style privacy law. This
would boost our tech sector and reduce compliance burdens for ordinary businesses. As
noted above, even the European Commission considers the New Zealand rules adequate, so
our expectation is that the UK’s adequacy decisions would be maintained.
Scrapping the Electric Vehicle Mandates
A Reform government will scrap the 2035 end-date for sales of new petrol, diesel and hybrid
light commercial vehicles altogether. We will dismantle the Zero Emission Vehicle mandate
as it applies to cars and vans. These rules were first introduced by the Conservatives, as
part of their Net Zero push. They have subsequently been maintained by Labour, though the
Government is currently consulting on slightly weakening them.
These rules are particularly harmful for small businesses. A diesel van or pick-up truck isn’t
a lifestyle choice for a tradesman; it is often a business necessity. A plumber, builder, courier
or caterer needs a vehicle that carries the right load, covers the required route and can be
refuelled or recharged without losing working hours.
And unlike large enterprises, they can’t necessarily adapt. Large fleets may be able to
reorganise routes, install depot chargers and spread the cost across hundreds of vehicles. A
five-person building contractor can’t. Vans will need to be parked at employees’ houses, and
hours may be unpredictable.
15
Under current rules, 70% of manufacturers’ new van registrations will need to be zero-emission
in 2030. At the moment, battery-electric vans account for only 11.5% of registrations.40 That
means meeting these targets will be almost impossible. Even the Government’s less ambitious
proposals still create a deadline that will be hard to meet.41
As a result, they will become just another tax on small business. The mandate fines
manufacturers up to £15,000 per non-compliant van. Much of these fines will be passed
through to the customer in higher new-van prices, including on the diesel vehicles businesses
actually want to buy.
Scrapping the mandates means small businesses can adopt the technology when and if it
makes commercial sense for them.
16
Conclusion
For too long, politicians of both parties have treated successful businesses as an endless
money pit and a device through which to achieve political objectives without paying for them.
Hire another worker, and you pay more tax. Work a few extra hours, and the Treasury takes a
cut. Grow past an arbitrary turnover threshold, and you suddenly face VAT and another pile
of paperwork. Take on an apprentice, and you shoulder the cost and risk. Try to raise money
from your own family, and the tax system treats them worse than a stranger.
Reform would change that. We would raise the VAT threshold so firms can grow a bit larger
without running into a giant tax bill. We would make it cheaper and easier to hire British
workers and train the next generation. We would enable entrepreneurs to raise money from
the people who know them best. We would repeal European regulations that are still holding
British business back, a decade after the Brexit referendum.
There is a common principle behind all of these policies. Business owners know more about
what their business needs than a civil servant in Whitehall. Most of the time, the best thing
the government can do is get out of the way.
Britain will only become richer when retailers can open a second shop; when builders can
take on an apprentice; when a software company can hire a tenth employee; when a father
can back his daughter with a good idea; and when small businesses can become medium-
sized businesses, rather than deciding that growing simply is not worth the trouble.
That is the deal Reform offers small businesses: Take the risk. Hire the worker. Train the
apprentice. Open the shop. Build the software. Grow the business. We will get out of the way.
And we will back you.
17
Appendix
Costs are in nominal £mn
HMRC Delay Repay
We estimated the distribution of call times at HMRC based on the 2024 National Audit Office
report.42 The NAO reported calls in 2023/24 averaged 23 minutes, with 44,000 (0.25% of
completed calls) dropped on hitting 70 minutes. We fitted a log-normal distribution to these
numbers to determine that the share of non-abandoned, non-deflected calls over 30 minutes
is around 20%. We assume the number of calls and deflection/busy rate has remained
unchanged at 36.5 million, giving us 3.9 million ‘over-time’ calls, plus 3 million played a busy
message, which are eligible for ‘delay repay’. We account for fewer taxpayers abandoning
their calls as they are now being paid for their time and for a substantial improvement in
HMRC services, given this new incentive, to reach our basic estimate.
SEIS Expansion
The costs shown above are in steady-state. In the first three years of the policy, disposal relief
costs will not change, as an investor must hold an SEIS investment for more than 3 years in
order to be eligible for this support.
18
Endnotes
1. Federation of Small Businesses, Small Business Index, Quarter 2, 2026.
2. ONS, Trends in UK business dynamism and productivity: 2025.
3. ONS, Business Population Estimates.
4. Samuel Norman, ‘Number of AIM-listed firms sinks to lowest level since 2001’, CityAM (11 March 2025).
5. Business and Trade Committee, Investing in the UK economy.
6. DBT, Business regulation: business perceptions survey 2024.
7. Federation of Small Business, Taking a Toll
8. National Audit Office, The Business Impact Target: cutting the cost of regulation.
9. DBT, Employment Rights Act 2025: Economic Analysis, p. 7.
10. BBC News, Job vacancies at five-year low as smaller firms scale back recruitment (18 August 2026).
11. ONS, Business demography, UK: 2024
12. OBR, The impact of the frozen VAT registration threshold
13. HMRC, Annual UK VAT statistics 2024 to 2025 commentary
14. OBR, The impact of the frozen VAT registration threshold
15. Office of Tax Simplification, Simplifying everyday tax for small businesses
16. House of Commons Library, Changes to agricultural and business property reliefs for inheritance tax.
17. Federation of Small Business, Taking a Toll.
18. National Audit Office, HMRC Customer Service.
19. At £19.67 median hourly earnings for FT workers. ONS, Employee earnings in the UK: 2025.
20. Noah Eastwood, ‘HMRC gives trans people access to VIP hotline’, The Telegraph (27 May 2026).
21. See HMRC, DMBM802050 - Time To Pay: Time To Pay requests: written requests for Time To Pay.
22. BBC News, Job vacancies at five-year low as smaller firms scale back recruitment (18 August 2026).
23. Under our Making Welfare Work package, firms could also receive an additional NICs cut in exchange for managing employee disabilities.
However, no firm with fewer than 6 employees would face obligations under this package.
24. MakeUK, ‘Calls for Skills Investment Pledge to reverse plummeting apprenticeship numbers’
25. Pieter Snepvangers, ‘Business could face £680m hit from Labour’s union plans’, The Telegraph (9 February 2026).
26. Jonathan Leake, ‘Net zero blamed as British factories pay nearly twice as much as France for electricity’, The Telegraph (22 February 2026)
27. Prosperity Institute, Good Money After Bad.
28. DESNZ, Industrial gas prices in the IEA (QEP 5.7.1).
29. ONS, Business insights and impact on the UK economy: 20 August 2026.
30. Peter Foster, ‘UK’s ability to make medicines and missiles hit by decline of chemicals industry’, Financial Times (4 August 2026); Reuters, ‘UK
losing jobs abroad due to high energy costs, manufacturers and union warn’ (15 June 2026).
31. Tyler Goodspeed, The Never-Ending Credit Crunch.
32. OECD, Financing SMEs and Entrepreneurs 2026. OBR detailed forecast tables.
33. Global Entrepreneurship Monitor: UK Report 2022/23, p. 38.
34. Global Entrepreneurship Monitor: UK Report 2022/23, p. 38.
35. HMRC, Tax relief statistics (January 2026).
36. BDO and Norman Broadbent, Navigating a new era for the Non-executive Director, p. 5.
37. DBT, Business Perceptions Survey 2024
38. Jian Jia et al., How Does Privacy Regulation Affect Transatlantic Venture Investment? Evidence from GDPR.
39. Rebecca Janßen et al., GDPR and the Lost Generation of Innovative Apps.
40. SMMT, Electric vans at record level but targets remain distant.
41. DfT, Zero emission vans: regulatory flexibility.
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