Criminals and bad actors are actively probing the smallest end of the business market and looking for whoever has the weakest security. Being small is not a protection.

The UK government’s Cyber Security Breaches Survey 2025 found that 35% of micro businesses and 42% of small businesses identified phishing attacks in the last year. Let’s look at some other stats that came out of the survey, check in on the most common issues SMEs face and then I’ll outline my simple 4-week Spring Cleaning plan.

July 19th, 2024

Do you remember seeing pictures of airports with huge banks of monitors, all of them displaying the ‘blue screen of death’ (see intro image)?

This wasn’t a cyberattack. It was a relatively insignificant ‘rapid response’ update. It’s the kind of update you’re encouraged to install as soon as it’s available. And it was from a trusted and respectable vendor, CrowdStrike.

After installing, a minor logic error meant that every time the computer tried to wake up, the error was seen as a threat, and the computer refused to load. Because the code was installed into the kernel, or operating heart, of the system, even the tools you would use to fix a problem refused to open.

Estimates say that across the world, on that one day, $5 – 10 billion was lost. Did CrowdStrike have to pay any of that back? One report says, due to the service agreement, they were liable for as low as $500 million. So virtually none of the lost money. For most small businesses, because Crowdstrike issued a fix within 24 hours, the agreement said that any losses had to be borne by the vendor.

Shooting Themselves in the Foot

What makes this so awful was that It was self-inflicted. CrowdStrike made the initial mistake in the rollout and company after company obediently accepted the update.

Often for a small business, decisions are a trade off between convenience and security. The fastest way to get things done is not always the safest. Multiple internet-connected devices, off-the-shelf products with default configurations, and a network that you might not own or don’t understand.

Shared passwords, missing multi-factor authentication (MFA), poor backups, old systems, or nobody clearly responsible for updates and recovery. The IT strategy could become, ‘We’ll sort it out later’.

‘Later’ Or ‘Too Late’?

Attacks can be direct:

A single weak password practically destroyed KNP, a transport company in Northamptonshire. They lost all their data when they couldn’t afford to pay the ransom demand. 700 people lost their jobs.

Or hit you from your supply chain:

In Easter of 2025, M&S’s online store closed for 7 weeks due to an attack. It cost them an estimated £300m in lost profits. The Co-op had a similar attack around the same time. But, the attack also affected M&S’s suppliers. The Black Farmer in Brixton supplied both of the supermarket giants. The result? The attack wasn’t aimed at them but they lost thousands of pounds of revenue.

Insider Risk

STAT 1:

Overall, 19% of businesses reported having staff training and awareness raising activities for cyber security.

In many SMEs, the real danger is normal people doing normal things. Just going about your daily work contains a number of touchpoints with the outside world that could hide a threat:

• Sending information
• Clicking on links
• Downloading something useful
• Plugging in a device
• Trusting an external request

We’re All Vulnerable

We started this blog with the CrowdStrike issue. You may not be using CrowdStrike but you are likely using Microsoft Defender, Bitdefender or relying on your Mac to keep you secure.

Anthropic (an AI industry giant) recently announced Project Glasswing. They have developed a new AI model called Mythos which is extremely good at finding security vulnerabilities in existing, widely-used software. Project Glasswing is Anthropic’s offer to provide this model to major, widely used software providers in advance to help them fix their issues. How many of the major players had issues in their software code?

Mythos Preview has already found thousands of high-severity vulnerabilities, including some in every major operating system and web browser.

Phishing Scams:

These are still the most common and effective method that bad actors use to compromise your business. They want access to your passwords, your customer data and your cash. They sell on your valuable personal data. This risks your customers and your company reputation.

AI is making scams are even more sophisticated as research about you and your business is faster and easier. Emails sound like people you do business with wrote them. Calls sound like voices you know. Urgent requests for information might include the names and contacts of your clients. Criminals who infiltrate your network can encrypt your data remotely and demand a ransom to return it to you.

USB Drives, USB Devices and Charging Cables:

Any USB device could auto play and begin to copy your data, memorise your key strokes, take screenshots of your activity and silently transmit them to the Internet. They can implant software into your computer that continues to run after you have taken the device out. Once connected successfully to one computer, they can infiltrate other devices on your network.

Downloads and Malware:

Free, useful software may be open-source (available without charge and come from a reputable source. Some websites are marketplaces for tested and virus free software. This software may have limited functionality until you buy a more advanced version.

But, if something is free, re-consider why. ‘Free’ may mean the software includes something more dangerous.

Zero to Cyber Hero: Simple Steps

STAT 2:

Only 4 out of 10 businesses have adopted more advanced controls like multi-factor authentication (MFA).

Passwords:

Don’t use the same password, or slight variations, across multiple accounts. Ban password reuse for business accounts.

Why? Now that everything is digital and your username is likely to be your email address, as soon as criminals gain your password, they can almost immediately try all your other accounts. Any similarity makes their job much easier and quicker.

Password Managers:

Long, complex passwords can be stored in an encrypted folder that is locked by one memorable Master Password.

Why? Only the Master Password is at risk. Make it easy enough to remember so that you don’t have to write it down anywhere. All your other passwords are now much safer because you don’t need to remember them. When prompted for a new password, your browser or device will give you a pop up asking you if you want it to create a password on your behalf.

Passphrases:

Make your Master Password a passphrase. Length is more important than complexity. It’s longer but still relatively easy to remember. Personally, I like to think of a cartoon or television show catchphrase e.g. It’sAnAce!HigherOrLower? That’s 24 characters long but it’s something you can remember (at least if you’re familiar with Get Your Cards Right).

Multi-Factor Authentication:

Your account prompts you for a number. An app on your phone has to be opened to provide you with a unique personal number which updates every 30 seconds. Download an authenticator app.

Hardware Security Keys:

For your most important accounts, this looks like a thumb drive. You either plug it into a USB port or, for a smart phone, place it against the NFC sensor on the back of the phone. This means your account can only be unlocked when you are physically present.

Why? These are the current gold standard. They are almost impossible to replicate or intercept. Buy two keys and set them with the same PIN in case one gets lost. No passwords are stored. Instead, a Private and a Public key are set up for each account you wish to use it for. Once set up, when you sign in, you’ll be prompted to press a button on the key, or place it against your phone, and the key will use its Private key to complete a challenge and send back the answer (‘sign the challenge’). The website will then use the previously shared Public key to verify it’s you.

Zero to Cyber Hero: Your Set Up

STAT 3:

Less than a third of businesses (31%) had set up a virtual private network for remote staff. Almost the same number (30%) had active user monitoring

Restart, Don’t Just Close the Lid:

If you’re using a Windows computer, the system memory only fully clears if you Restart your computer. Shutting it down saves the current state and then re-awakens it back to where it was. Shutting the lid is like interrupting your computer mid-flow. All your software will still be running.

This is counter-intuitive but your computer will be healthier if you Restart it more regularly. The drivers get a fresh start so there’s less chance they are corrupted. And when you Restart, your software gets a reset and any updates that have been waiting to kick into gear are all applied.

Updates:

Don’t updates just add more code to my computer’s memory and slow it down? After a big update, your system is crunching away in the background making all the changes and your device may well be slower for a few hours. However, updates are intended to remove code which is leaking RAM memory (using up memory space but not releasing it when it’s finished). Replacement code is more efficient and should get you running faster. But, the real reason to keep updating is safety. Patches fix potential weaknesses. This includes your router which can take a bit of effort to update if you’re not controlling it via an app. Connect using an Ethernet cable for security, log in to your router through your browser, and find Firmware Updates or Router Upgrades.

USB And Other Plug-in Devices:

Only use USB, thumb drives and cables that you bought yourself and you know no one else has used. Switch off Autoplay settings so that any foreign device that identifies itself as a USB drive. This prevents your computer automatically recognising and activating it.

Firewalls:

Change any default passwords. Your firewall may be set up to open a hole (or port) to allow an area or system inside your network to be accessible from the wider internet. Run an external port scan using reputable scanning software to test if there are open ports that you did not authorise.

Check your router’s firewall too. If the network isn’t yours, you may need to configure an additional firewall on whatever software that network is using. Turn off Universal Plug and Play (UpnP), disable remote admin (unless you absolutely need it) and any Wi-Fi Protected Set Up.

Staged Rollouts:

Larger companies with a range of devices and connections to their network should consider this. Give a small percentage of your workforce permission to download a new update. Allow enough time to test for any immediate issues. After, broaden the rollout to a larger number of staff and finally the whole company. If something like the CrowdStrike issue happened again, this process would limit the damage it could cause.

Back Ups:

Keep one backup separate from your day-to-day network. If you leave the place you save your back up is a separate drive, disconnect it between back ups. Otherwise, bad actors that infiltrate your network can encrypt it remotely just like all your other data.

Verifying Payments:

Finally, implement a callback rule whenever someone contacts your company regarding a payment or bank information changes. Ensure your staff know that they must disconnect the call, find a phone number they already trust and call the individual back before making payment.

Government Assistance: Cyber Essentials

The Cyber Essentials scheme is a UK government-backed programme that provides companies of all sizes with a checklist of practical steps to take to protect themselves against online threats. Good news is that, just last year, organizations with Cyber Essentials in place made 92% fewer insurance claims. The programme includes access to free cyber insurance, including a 24/7 emergency helpline. To sign up, use the free online self-assessment as well as a free 30-minute consultation to help you complete certification. From there, you can move on to IASME Cyber Assurance. Separately, you can sign up for free NCSC Early Warning notifications.

Now, time for that Spring Clean I promised:

One Month Spring Clean Plan

Week 1: Switch on MFA

Across your set up, add an MFA account using an Authenticator app to all your most important website accounts.

Week 2: Fix Passwords and Logins

Ensure staff only have access to their personal accounts and are using a Password Manager with a memorised Master Passphrase.

Week 3: Test your Back Ups

Set up a backup on a secure device and test you know how to restore that backup

Week 4: Raise Awareness

Conduct staff training to explain phishing scams and how to avoid them. Ensure all know, when they recieve a payment request, to call the company back using a number you either have on record or source yourselves.

After that, spend one hour a month:

• 15 mins checking who has access to your network
• 15 mins confirming the backup process is working
• 15 mins installing pending updates
• 15 mins reminding staff about security and checks you have put in place.

If you want to find Clarity and enjoy research-based customer insights, Clarity offers in person customer interviews for SMEs in Hackney. We offer a package of 5 half hour interviews per month and promise 5 actionable insights from each interview, providing you with authentic, independent customer feedback and a suite of marketing materials to build your reputation and word of mouth referrals.

The post Cyber Threats: Spring Cleaning For SMEs appeared first on Clarity.

• Hospitality
• Retail
• Logistics and distribution
• Creative industries
• Social care

Or, perhaps you are using an agency to supply workers when you need them? They might be on zero hour contracts (ZHCs). As you know all too well, workload varies throughout the year e.g., Black Friday, or it’s based on winning tenders so a big win means all hands on deck for a short but accutely busy period.

From April 2027, the flexible labour market is going to change. The Employee Rights Act came into law in December 2025. This blog is the first part of a series dealing with the impacts.

I work with SMEs in Hackney. The Borough has strong hospitality and creative sectors so, when I heard about the end of ZHCs as we know them, I did some research …

Did The Government Just Ban ZHCs?

In 2015, 10 years ago, the Labour Party pledged that they would “introduce a right for those working under ZHCs to request a “standard” contract from employers after 12 weeks“. Labour re-introduced this promise in the New Deal for Working People in 2023 (see banner image above taken from ). And in 2024: “Labour will end ‘one sided’ flexibility and ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts“.

Last December, the Employment Rights Act became law.

This is the first part of the Plan to Make Work Pay – a labour market shift with 70 separate measures to make finding, keeping and progressing in work in the UK more stable, predictable and productive. 28 of those measures have now made it into law. The first changes come into effect from April this year (see the box below ‘Phase One’).

In anticipation of the Bill becoming law, in November 2024 the FSB surveyed their members to find that 67% would recruit fewer staff as a result. Exactly 0% said they would consider employing more staff as a response. 24% said that they would try to automate in an effort to reduce the number of staff.

80% of British SMEs say the Employment Rights Bill is a positive step forward for staff.

In August 2025, BreatheHR asked 500 UK SMEs about their feelings. 68% of SMEs surveyed felt that there would be a positive impact on staff productivity. However, 61% felt there would be a significant increase in the time and effort it will take to manage the changes.

What Does The Act Say About ZHCs?

The Act places significant restrictions on ZHCs.

It does not “ban” ZHCs, but it gives workers who have worked a regular pattern for a set period (probably 12 weeks) the right to request a predictable working pattern. Employers can only turn down that request on very specific grounds.

Importantly, this measure includes agency workers.

“The Bill has the potential to lift 1.2 million people out of severe insecurity at work, and improve job security for nearly four million workers.” Ben Harrison, Director of the Work Foundation at Lancaster University

What Does The Government Mean By Exploitative ZHCs?

Workers complain they are “struck off” shifts for taking too many toilet breaks. Some report finding bottles which colleagues have used to pee into to prevent them having to leave their station. Staff report searches as they leave to ensure they have not stolen anything but that the time it takes, up to 15 minutes per shift, is unpaid.

Others report employers cutting shifts short if business is slow. and only paying up to the time they finish or the opposite – facing undue pressure to work last minute shifts when demand is high.

Some high profile employers like Sports Direct and JD Wetherspoons now offer guaranteed hours but a quick search online finds that there are still cases where a manager asks an employee to use their holiday during quiet times. Or, they do not work their guaranteed hours and do not get paid.

“You can think of it in terms of it being employer-driven or worker-controlled flexibility, but, for the worker, it’s really experienced as insecurity,” says Dr Alex Wood, an assistant professor in economic sociology at the University of Cambridge

How Did We Get Here? The Current Labour Market

In 2006, the Office of National Statistics suggested that fewer than 150,000 workers were on these kinds of demand-driven, “If there’s work available, we’ll give you a call,” contracts.

Then came the financial crash of 2008. The recession that followed led a lot of businesses to do everything they could to reduce their costs. They didn’t want employees on the books with little work available to keep them busy. Flexible work became more popular while, at the same time, the government was keen to keep unemployment figures low (see the box, No Work Makes Jack a Dole Boy)

As of early 2026, about 1.2 million people in Britain are reliant on casual contracts to earn a wage. There are now 508,000 young workers aged 16-24 on ZHCs. This is the highest level on record.

Statista.com

“We’ve got 15 million people living in poverty in Britain – over half of whom are in work.” Paul Nowak, Trades Union Congress (TUC), Oct 2024

What Is The Guaranteed Hours Offer (GHO)?

In 2023, 92.5% of ZHCs workers would have qualified to be offered guaranteed hours.

Employers must offer a guaranteed hours contract to workers on zero-hours or “low hours” contracts if they regularly work more than their contracted hours. Some details are not yet confirmed e.g., the definition of ‘consistently working’. Employers can, however, still provide fixed term contracts.

Rights against dismissal after 6 months:

Employers can no longer use ZHCs as a ‘de facto’ probationary period. Related to this is another part of the Act. From July 1, 2026 new employees gain full protection against unfair dismissal if they are still employed on January 1, 2027. Employers will not have the traditional two-year period to assess whether to offer a full-benefits contract.

An ‘opt-in’ for stability:

Eligible workers have the right to request or accept these guaranteed hours, but they are not obligated to do so; they may choose to remain on a ZHC if that flexibility suits their personal circumstances. When JD Wetherspoons trialled their guaranteed 70% of average hours contracts in 2016, at least two thirds took them up. Recent reports (2024/2025) indicate that 96.6% of hourly-paid staff are now on guaranteed-hour contracts.

Shift predictability:

Workers must be offered reasonable notice of shifts (probably 7 – 14 days with trade unions lobbying for at least 2 weeks), with compensation if a shift is cancelled, moved, or shortened at short notice. For ‘reasonable notice’, based on European trends and Acas recommendations, anything less than 7 days will be hard to defend.

Extension to Agency Workers:

All the new rights regarding guaranteed hours and shift notice will also apply to agency workers.

Anti-Avoidance Protections:

The Act includes provisions to prevent employers from intentionally limiting a worker’s hours during the reference period to reduce the average. The Fair Work Agency begins its work this April. They will have the power to require action from an employer, to enter premises and access files and computers, to bring tribunal action on behalf of an employee and to issue notices of payment and penalties. Employers will be able to appeal to an employment tribunal.

Phase One – April 2026

Many existing entitlements only available to employees after a period of service will become “Day One” rights:

• The right to Statutory Sick Pay (SSP) from the first day of sickness. No more Lower Earnings Limit for the receipt of sick pay.
• The right to Paternity and unpaid Parental Leave.
• The right to at least one week of Bereavement Leave. An expansion to include pregnancy loss before 24 weeks.
• The enhanced right to protection from dismissal for Maternity and up to 6 months after returning to work.

What Do SMEs Need To Do Now About Their ZHCs?

If you’re offering ZHCs, many of the administrative and compliance burdens are the same whatever the size of your business. If you do not have a dedicated HR function,you will face more risk of ‘vexatious’ claims. This is due to an expansion of employees’ rights and a shortening of full-benefit timeframes.

• You will need to track hours worked precisely and get ready to manage ‘guaranteed hour offers’.
• Start monitoring shift patterns and how regularly flexible workers receive shifts over 12 week periods to understand what your responsibilities will be.
• Give clearer and earlier notice of shifts. Begin to provide at least seven days’ notice for shifts to avoid the risk of compensation claims cancelling shifts late.
• Train managers or Team Leaders on how the new requirements affect shift allocations and shift changes.

Retail And Hospitality Focus

Trade body UK Hospitality says that 17 per cent of workers in the sector are on ZHCs – the highest proportion of any industry – and that research suggests these contracts are the desired way of working for the majority of people who are on them.

“Hospitality businesses have absolutely no more capacity to absorb costs and the Government must not increase the sector’s cost burden once again.” UK Hospitality, July 2025

In October 2026, new laws on transparency around employer tipping policies come into effect. Employers must consult to create a first draft and must review the policy every 3 years.

Add to this the changes to National Minimum Wage and business rates (see my blog on the Autumn Budget), the sector is facing a huge amount of pressure.

No Work Makes Jack A Dole Boy

For a long time, unemployment stayed at surprisingly low levels. In 2019, just before the pandemic hit, unemployment was around 3.6% of the UK’s available labour pool.

However, the low percentages were only half the story. Studies of this trend conclude that the results were a focus on getting people into any kind of work rather than matching them to quality work. The majority are helped into find low-paid, high-volume employment sectors e.g. supermarkets, social care, warehouse work.

Prospects for advancement are low – a measly 15% of low-paid workers escape this low-pay trap. Roughly a quarter of the whole labour market face a cycle of periods of finding a job followed by periods of unemployment.

Macrotrends.net

APPetite For Change: ZHCs And The Gig Economy

What are the likely results to be of this change? A greater flow of people to the gig economy. Typical examples are delivery couriers, ride-hailing drivers, parcel couriers, on-demand cleaners, carers and handymen. Some hospitality and retail shift‑workers are already booking in via apps, thereby volunteering for single shifts, jobs, or tasks.

There is still an appetite for hiring on flexible, insecure contracts. Will the raised minimum requirements for all employers encourage them not to employ at all? Instead, could they move to gig platforms instead?

“The side effects could be, potentially, that instead of having lots of people working fewer hours, you’ll have fewer people working more hours. That puts a bigger burden back on the state if more people are unemployed.” Simon Fennell, Shoosmiths

Will smaller teams work permanent contracts?

Will employers expect work to be completed in unpaid overtime?

Unspoken pressure from employers not to accept GHOs?

One thing everyone seems to agree on – we are going to see businesses restrict their recruitment and, where possible, reduce their headcount. Whether the security that these new contracts gives leads to productivity, growth and more jobs to be filled remains to be seen.

If you want to find Clarity and enjoy research-based customer insights, Clarity offers in person customer interviews for SMEs in Hackney. We offer a package of 5 half hour interviews per month and promise 5 actionable insights from each interview, providing you with authentic, independent customer feedback and a suite of marketing materials to build your reputation and word of mouth referrals.

The post Have the Government Just Banned Zero-Hour Contracts? appeared first on Clarity.

Since 2010, Hackney Council had lost 40% of it’s core spending power. They are facing a £36m shortfall just this year. The Mayor, Caroline Woodley, welcomed the Budget and praised the government for being one that is willing to “invest, reform and work with, not against councils.”

Caroline Woodley, Mayor of Hackney. Taken from news.hackney.gov.uk

Source: DLUHC; mhig revenue outturn (grants), ONS CPIH, adjusted to constant Dec (AI used to create this chart) Alt: A line graph plotting a gradual decline in Council funding in real terms over 20 years, dropping £40bn until a small uptick as of the 2025 budget.

What Money Has Been Promised To Fill The Void?

Councils will keep any receipts from Right to Buy sales in order to create new housing and a whopping £1bn will be provided for SEND (Special Educational Needs and Disabilities). The Household Support Fund for vulnerable families has a one year extension.

And Where Will The Money Come From?

A significant increase in employer and investor taxes. The government has effectively transferred much of the cost of social welfare to business owners. This includes increased wages, increased National Insurance contributions, and increased business rates.

In summary, the Chancellor announced changes that will impact your SME … and soon. In fact, it’s time to give serious consideration to your staffing levels, your business property, your pension arrangements and, if you’re an investor, your exit strategy.

Reason for Concern?

There was an overwhelmingly negative response from the business community. Huge concerns were raised that the overall effect will be to put businesses off from investing in their growth and people and, worse, that many businesses would simply not survive.

The Institute of Directors (IoD) did a snap poll of over 500 business leaders. The results? 80% reported feeling negative about the Budget. That’s a 13% increase on last year. The Institute concluded there were ‘worrying implications for the economy’s future growth trajectory’.

A “tough Budget for business to swallow” Shevaun Haviland, BCC

If you own a small coffee shop in Shoreditch or a design agency in Dalston with, say, 5 – 10 staff, things are about to get tight.

The most scathing response I have read was from the London Chambers of Commerce and Industry (LCCI), who include the London Borough of Hackney in their borders. They said that London businesses were “losing faith in the Government’s economic growth strategy … [that the Budget had] not gone far enough to protect London businesses which are the engine room of nationwide growth.” … [and that] “the only certainty they received was higher costs.”

An Alternative View

Is the loss of struggling businesses a necessary step to righting a stale economy? Unproductive businesses will go fallow, leaving space for those with higher margins to expand. Zombie companies, named because they aren’t able to make enough money to invest in any growth, will finally meet their end.

There’s also concern not enough money is being re-channelled to public services. Hackney Councillor Claudia Turbet-Delof implied the needle has not swung far enough. She warned that Hackney Borough will face a “complete exhaustion of reserves’ within 18 months”. The Local Government Association (LGA) agreed and said the Budget failed to provide the increases in council funding that they “desperately need.”

The Big Squeeze: Running A Profitable Business Just Got Harder

Increases to National Insurance

The Employment Allowance, or the threshold your total staff wage bill needs to hit before you have to pay Class 1 NIs for them, has gone up from £5,000 to £10,500. The previous cap on claims of £100K is no more.

At the same time, your liability per employee has dropped from £9,100 to £5,000. The rate of NI Class 1 contributions will also rise to 15% next year. This means paying 1.2% more tax on an additional £4,100 of earnings per employee, regardless of what profits you make. Also, this £5,000 threshold has been frozen until 2031, which means that as wages rise each year, the effective threshold will get lower and lower. Experts call it ‘fiscal drag’.

Takeaway #1: Even if you have only 4 full-time employees, it’s likely you will be paying more NI than you were before. SMEs, especially in the hospitality and service sectors, are going to need to think carefully before their next hire. Ensure your payroll software is updated to claim this automatically from Month 1 of the new tax year.

Consider the following example:

The Sweet Spot: An imaginary independent bakery in Hackney.

• Staff: 1 Manager, 1 Head Baker, 3 Floor Staff (mix of full/part-time).

The business faces a drastic increase in underlying NI costs due to the rate rise (13.8% → 15%) and threshold drop (£9.1k → £5k).

Despite the increases, this business actually pays £1,410 LESS in National Insurance than before because the allowance increase (£5,500 extra relief) outweighs their NI cost increase (£4,090 extra cost).

Increases to National Minimum Wage

For SMEs, the costs of training for any apprentices under 25 will be fully funded and the 5% employer contribution removed. This will help with developing younger staff in-house while managing the rising cost of employment.

At the same time, minimum wage rates will rise from April 2026:

• Over 21s (National Living Wage): Rises to £12.71 per hour.
• 18 to 20-year-olds: Rises to £10.85 per hour.
• Under 18s and Apprentices: Rises to £8.00 per hour.

Takeaway #2: If you employ anyone at NMW rates, your wage bill Is about to increase across the board and not by a small margin.

Increases to Business Rates

Business rates are essentially the “council tax” for commercial properties, paid by businesses on the shops, offices, and warehouses they use.

From April 2026, The Chancellor announced a 40% relief for retail, hospitality, and leisure (RHL) properties. However, previously, the relief was 75%. This is an effective increase. Of course, businesses in other sectors or with larger, more expensive properties valued over £500,00 will be paying higher rates to pay off the shortfall.

Takeaway #3: The is a relief cut, not an additional benefit. The government wants high street businesses to pay less than their larger out of town counterparts. The £500, 000 business property threshold will disproportionately effect parts of the country where property is valued more highly. This is all in addition to Hackney’s increasingly higher rents as higher wage earners spread out from Central London.

Karim Fatehi, CEO, LCCI. Taken from londonchamber.co.uk Quote from Autumn 2024 Budget | News and Insights – LCCI

“We are deeply concerned… the combined package of increased employer National Insurance Contributions, cuts to business rates relief, and minimum wage increases will create a challenging environment… and curtail their ability to invest or hire new people”.

Summary of Effects on SMEs

20 years of change in National Minimum Wages and Employer NI Thresholds

Chart created manually (NMW based on a 16.5 hr working week).

The Big Squeeze: Earning From Your Business Just Got Harder

The Squeeze on Dividends

Many small business owners pay themselves a combination of a small salary and dividends (a share of the company’s profits). Owners who pay themselves a low wage but a high dividend will find, from April next year, that this approach will pay less than before.

From April 2026, the tax rates on dividend income will rise by 2% (from 8.75% to 10.75%; higher rate from 33.75% to 35.75%).

Jason Hollands, managing director at Evelyn Partners: “These hikes seem to be aimed mainly at extracting more cash from the UK’s small business owners, who don’t have the option of owning their company shares in a tax efficient individual savings account.”

Annual Investment Allowances (AIA)

The AIA allows you to deduct the full value of qualifying items from your profits before tax. Instead of steady depreciation being built into your accounts to cover the value, you get 100% tax relief in the year you buy it, limited to a cap of £1M. This change begins with immediate effect which means, if you are profitable this year, make sure your equipment purchases are invoiced and delivered (and clearly dated) before your company’s financial year-end.

The Sweet Spot, our imaginary Hackney bakery.

The owners could invest in equipment such as:

• Kitchen Equipment: Ovens, fridges, coffee machines, dishwashers.
• Fittings: Air conditioning, heating systems, extraction fans, bathroom fittings (these are “Integral Features”). Consider fixtures like new bars or shelving.
• Tech: EPOS systems, computers, sound systems.

Let’s say the bakery makes a gross profit of £60,000. They decide to invest in a new deck oven and air conditioning before their year-end.

• Purchase: New Deck Oven (£12,000) + AC Installation (£8,000) = £20,000 Total.

By using the AIA, the business saves roughly £3,800 – £5,000 in Corporation Tax immediately.

The Squeeze on CGT

First, note that if this is your first year paying CGT, there is a 40% relief available from January 2026 (with the other 60% eligible for writing down allowances from Year 2 onwards).

For all other businesses, the main rates have increased from 10% and 20%, with the higher rate rising from 18% to 24%. While the main rate is capped at 25%, the “write down allowance” main rate was reduced, meaning businesses will now receive less tax relief on investments in equipment.

The Squeeze on Asset Disposal

Business Asset Disposal Relief rate will increase from 10% to 14% (April 2026) and then to 18% (April 2027). This means that selling after April 2026 could cost substantially more. Although the standard CGT rate for higher-rate taxpayers is 24%, the difference is shrinking between the two.

Hackney CADS: An imaginary design agency in Hackney.

Hackney CADS plans an exit with a £2.5 million gain in value.

By 2027, the margin between taking advantage of BADR and paying main rate CGT will only be £150K, shrinking quickly from the current £350K.

Derry Crowley, CEO of Xeinadin. Taken from the Xeinadin.ie website. Quote from RedLeafAccountancy

“The reduction in the writing down allowance limits businesses looking to invest in equipment in order to remain competitive. Removing £1.5bn in relief at a time when firms are already managing tight margins could make long-term investment harder, not easier.”

Summary of Effects

Takeaway #4: The government is encouraging investors to stay put and build what they have, rather than flip and move on. Exiting is more expensive but rewards investing cash in hard assets. Owners, contractors that are winding down companies, and those planning management buyouts or family transfers will all be affected. Planned exits will be significantly if executed before April 6th next year.

In summary, the 2025 UK Autumn Budget recalibrates the costs of public services and shifts those costs to businesses through increased employer National Insurance, higher minimum wages, and reduced business rates relief (for retail and hospitality). SME will simultaneously be taxed more for business exits.

The Big Squeeze is on.

The post Autumn Budget 2025: SMEs Squeezed – What It Means For You appeared first on Clarity.

Amid these huge numbers, many small and growing businesses are chasing that dream: securing that game-changing investment to fuel growth and turn a vision into reality.

Sometimes companies end up chasing growth for the sake of growth rather than thinking about profit.

I attended the BPIC’s Kickstart programme a few weeks ago and our group of new business owners were shown a slide with a list of all the options available. There were a few things on there I’d never considered and, since then, I’ve been wondering how it all works. So, let’s find out what the funding landscape actually looks like.

What is Debt Financing?

Perhaps the most obvious place most of us think of for securing additional money is our bank – whether it be a loan or an overdraft facility. However, the UK Government, via the British Business Bank, also supplies Start Up Loans to small businesses. Funding Circle, a platform for peer to peer lending also offer loans to businesses. Finally, you can get large amounts of credit in the form of a credit card from Capital on Tap.

A couple more debt financing options are Asset Finance. This form of borrowingaccepts your business’ physical or intangible assets (think IP or patents) as collateral to obtain the finance. Asset finance has the highest recorded approval rate among debt types, at 96%.

Last but not least is Invoice Finance, where you sell your unpaid invoices off to a third party to collect and, in return, they advance up to 90% of the uncollected payment, then go and collect the whole payment themselves.

Who is Debt Financing suitable for?

Debt financing is generally best suited for businesses that have predictable revenue streams and tangible assets, such as manufacturing, retail, or established service businesses. It is typically less suitable for companies in the early stages, such as pre-revenue startups or R&D-intensive firms. The average success rate for SME lending sits at 50%.

Case Study: Amity Brew

Amity Brew Co is a local craft brewery, offering a range of draught and canned beers. They provide tours of the brewery, an outside terrace, inside bar and weekly events for the community. They also have their own merch for sale. The three directors took out their loans in April 2020, at £25,000 each. The Start Up Loans funding aided the business in opening its first bar and brewery in Farsley and contributed to purchasing a canning line and recruiting new team members.

As of May 2025, Amity Brew Co is expanding its operations, recently securing a £150,000 investment from Finance Yorkshire for a new production facility in Bradford.

Debt Finance Examples (October 2025)

What is Equity Financing?

To most of us, our greatest exposure to this type of funding is Dragon’s Den. A business seeking investment offer a percentage of ownership in their business for a cash injection. I’m sure we’ve all found ourselves watching and wondering how the seemingly naive business owner came up with that million pound valuation.

The Dragons, and Lord Sugar from the Apprentice, are Angel Investors, bringing their own personal fortunes (in piles of £50 notes) to spend on whomever they see the potential in. Along with the percentage of the business comes the influence they can have on the decisions and investments the business itself goes on to make. The ideal scenario is that 5 – 10 years down the line, the business can be sold on at a much higher value and their percentage of that value is paid back to them.

Venture Capitalists tend to invest larger sums (£250,000 or more) of other people’s money. They will get more involved in the running of the business they invest in, sometimes taking a seat on the board and advising on the business’ core strategy.

Not to be forgotten …

Also under this header comes friends and family, the Bank of Mum and Dad. Crowdfunding (Crowdcube, Seedrs) is another equity-based method of raising funds.

There are UK Government initiatives to incentivise investors. SEIS (Seed Enterprise Investment Scheme) is for start ups trading less than 3 years and EIS is for SMEs who have been trading less than 7 years. Investors receive income tax relief as a credit. They are also not taxed on Capital Gains Tax (as long as the business continues to qualify for 3 years) and can claim loss relief. Note that the criteria for receiving the tax-related benefits are multiple and strict.

Who is Equity Finance suitable for?

Equity funding is typically more suitable when a business is going to market or looking to grow, especially once a developed, proven product and clear customer base are established. A successful crowdfunding campaign can also serve as effective marketing and a proof of the popularity of a business concept. Certain companies, such as property holding businesses, banks, and businesses primarily exploiting third-party intellectual property, would be unlikely to qualify for SEIS/EIS.

Case Study: PerfectTed

PerfectTed, clean, matcha-based alternative energy drinks, received a £50,000 investment from Dragons Steven Bartlett and Peter Jones for a 5% stake. The investors helped the business to go global. Within two years, the company reached a £140 million valuation.

Insight #1

Limited companies are increasingly being asked to give personal guarantees.

What does this mean?

Putting your personal assets, like your house, on the line before receiving any loans. This includes banks and the government’s Start Up Loans scheme. In other words, you are no longer protected by your limited company status. The money is given to you and not to your business.

Insight #2

Consider the opportunity cost of the time spent on securing a Venture Capitalist.

What are the odds?

For many grants, the strict criteria for entry makes finding something that doesn’t require you to adjust your business strategy a little, if not a lot, is a challenge. If you do apply, the application process can involve interviews, targets (with the potential risk of clawback if missed), monitoring and reporting requirements. Which is why Universities have bid writing experts working full time to find and complete their applications.

Venture Capitalist funding has been known to require meeting and pitching to 45 VCs over 15 weeks before securing investment. The average success rate for venture capital applications remains extremely low at 1-2%.

The question has been asked whether the time spent on the cycle of applications, followed by the bureaucracy of monitoring, might just end up costing more than the value of the award.

Insight #3

Weigh the loss of control, especially if multiple rounds of funding are likely.

What is the impact?

An Angel Investor using their own money, or Venture Capitalist investing collected funds, will require an equity stake. We might have heard the reasoning that the business will have a ‘smaller slice of a bigger pie’. Another aspect of equity dilution that needs to be weighed up is the inevitable loss of control. Naturally, investors want a rapid return (often looking to achieve 10x their initial stake). The larger the equity, the more influence they will have on the board and your strategy, and to what end? Faster growth and a faster exit.

Insight #4

Take special care when setting up EIS or SEIS funding.

Certain types of companies, such as property holding businesses, banks, and businesses primarily exploiting third-party intellectual property, generally do not qualify for these schemes. Acquiring ‘advance assurance’ from HMRC to ensure no one loses out is advised.

SEIS and EIS requirements

In Part 2, we’ll talk about grants and competitions, as well as the unique opportunities available to social enterprises and charity organisations.

The post Beyond the Bank: Overlooked Sources of Finance for SMEs Part 1 appeared first on Clarity.

I’m a small business owner who wants to leverage AI myself, so what’s the deal? Are we all going to be replaced … or enhanced? Let’s find out.

How Do AIs Search For Answers?

If you’ve been keeping up with the tech news, you might want to skip this paragraph, but a lot of business owners are still at the starting line trying to understand what AI can do. Artificial intelligence is a system that does things in a human-like way. We’ve all used Google search and learned to change full sentences into keywords to get the information we were looking for.

Then Chat-GPT came along and we could just start to type in (or say) a question and, a few seconds later, the answer wasn’t a list of new Internetty links to choose from, but a paragraph of human-sounding text explaining what the answer was. Jaw successfully dropped.

In only a couple of years, we’ve learned that a lot of those answers have been plucked out with some, but not much discernment, from the largest library in the world, the World Wide Web. How do they sound so human? It’s all due to LLMs (that’s Large Language Models) – a huge memory bank of millions of real sentences, all broken down into pieces and their probabilities of occurrence all notched into percentages.

Now, when you ask, ‘What is the capital of France?’ – just imagine all the books, films, blogs, poems etc. etc. which have referenced the answer … Paris. So the words ‘France’, ‘Paris’ and ‘capital’ have a super-strong percentage chance of occuring together. The LLM looks at that very high percentage and tells you, very confidently, and with increasingly more life-like phrasing, what the result of it’s comparisons is. Adoption of this amazing new technology has been rapid and, perhaps because it sounds so human, many people have started asking AI models for advice – 53% of UK small business owners are using Chat-GPT and its friends to help them guide business decisions. [1]

The Rise of Agentic AI

We are now moving from AI-search to AI-Agents, who perform a series of instructions for you based on the training you’ve given them. In some cases, these AI Agents can even make decisions on your behalf. Albania has recently appointed an AI government minister to handle public government contracts and has executive decision-making powers. [2]. On the horizon? AI Agents built into your Internet browser that can view your history and all your personal files, decide on your preferences, and buy or organise things it knows you like. And beyond that? The Agentic Web – Agents working together without any human involvement, comparing the data they have collected and coming to mutually favourable decisions [3].

So, should a small-medium size business be investing in this future? I mean, beyond the casual use of Chat-GPT, Co-Pilot or (for the dabblers) Claude. Is AI the game changer?

One Statistic That Speaks Volumes

Are you ready for the statistic MIT came up with in July this year to headline their study of Generative AI adoption’s Executive Summary [1]?

Despite $30–40 billion in enterprise investment into GenAI, this report uncovers a surprising result in that 95% of organizations are getting zero return.

This shocked me. That is a lot of money which, at least in the opinion of the researchers, had not led to the expected revenues that AI was meant to unlock.

So, some caution is in order here. If we think about it … not everyone needs a power drill. Now, if you need a drill, then you should absolutely invest in a power drill. AI is a powerful tool for repetitive, easily-supervised, non-risk business tasks. It is very much taking away junior roles in software-driven business sectors and, unemployment and related mental illness consequences aside, it makes sense that the kind of jobs a junior staffer would be given are the kind of jobs AI feeds off.

AI adoption and the J-Curve

Initial adoption of AI business solutions leads to a shift in the way a business works and consequent re-training, legacy program integration and all the related costs of building new efficiencies in. This means that businesses adopting AI in a big way see an initial drop in profits. The numbers show businesses taking 18 months or more to start seeing any financial benefits (between 2017 and 2021). [4] However, by the end of the 4 year period, early adopters had begun to outperform their non-adopting competition.

“AI isn’t plug-and-play,” saysKristina McElheran, one of the authors of a paper on the rise of AI in the US, “It requires systemic change, and that process introduces friction, particularly for established firms.” 

Sources: AI generated. Sector comparisons are based on 1) how widely different industries are using AI and 2) how advanced they are digitally, from official U.S. business surveys (BTOS and ABS) and insights from multiple other studies (census.gov, federalreserve.gov, apps.bea.gov).

Larger and/or more digitally mature businesses were better placed to get the advantage earlier. Complementary business functions needed parallel investment, such as data infrastructure, training and designs of workflows to accommodate the change. Without them, bottlenecks can appear or AI fails to deliver at the expected rates. Older organisations with legacy systems and very established routines also took longer to see the benefits. So, the more tech-adjusted you already are, the more nimble you are, the more likely AI can boost your company’s activity.

“AI isn’t just plug and play”

One corporate lawyer from a medium-sized firm noted that a $20/month ChatGPT subscription consistently produced better outputs than her firm’s $50,000 specialised tool. She noted:

“Our purchased AI tool provided rigid summaries with limited customization options. With ChatGPT, I can guide the conversation and iterate until I get exactly what I need. The fundamental quality difference is noticeable, ChatGPT consistently produces better outputs, even though our vendor claims to use the same underlying technology.” [3]

Security

If you are planning to invest in building your own AI solution, the model will need constant updates and maintenance, and the responsibility for security is all on your shoulders. The less human supervision a system has, especially if Agentic AI is used, the integral design of an LLM means that, without intervention, it sees your initial instructions and any other data it comes across with equal value.

Here’s part of a discussion about how LLMs work. Note the italics added by me:

“The difference is that LLMs are fundamentally insecure in this way as part of their basic design … this programming language deliberately executes values stored in the String type sometimes, depending on what’s inside it. And we don’t really understand how it makes that choice, but we do know that String values that ask the language to execute them are more likely to be executed. And this is fundamental to the language, as the only way to make any code execute is to put it into a String and hope the language chooses to run it.” [5]

In this grave new world, bad actors could plant secret commands (string type = text instructions) inside otherwise inoffensive website content. Your AI Agent crawls that data and asks you if you want to take a benign action e.g. ‘Summarise findings’, and then actions it.

What Can AI Do For SMEs?

Consider what tasks your business would like to enhance and the risk-reward profile:

• Could an off-the-shelf tool handle this for you? (see below for examples)
• Are you looking to combine multiple systems into more automated workflows?
• Is it something currently controlled by a human but with large financial or compliance risks attached?

If the answer is yes, seek the advice of an AI architect or consultant who can check how viable an AI system is. Or, join an Accelerator programme for SMEs, where expertise is more readily available (see below for examples).

Off-the-shelf solutions

UK AI Innovation Opportunities

Keep an Eye on the Dials

It goes without saying, but monitor your ROI and KPIs to ensure you know what benefits you’re getting. Appoint a champion who will explain the reasons and benefits to staff, of whom many are probably skeptical of AI more generally. On the opposite side of the aisle, some may be overconfident in their trust of automated systems. A pilot project involving a few voices from across the business might help with persuasion. Consider data risks especially and set out what the response should be in case data is compromised. Then, set the example and try to understand the technology yourself so that you can set a leading example in making use of it, and be among the first to notice any issues.

[1] What Does Worldpay Survey Say About UK SMEs’ Attitude to AI? | Business Chief North America

[2] Albania appoints world’s first AI-made minister – POLITICO

[3] State_of_AI_in_Business_2025_Report MIT NANDA Aditya Challapally Chris Pease Ramesh Raskar Pradyumna Chari July 2025

[4] The Rise of Industrial AI in America: Microfoundations of the Productivity J-Curve(s)

[5] Comet AI browser can get prompt injected from any site, drain your bank account | Hacker News

The post Before You Invest in AI: What Every SME Owner Should Know appeared first on Clarity.

Reviewing your record-keeping system

The requirement for no manual re-entry and digital links effectively means that some software purchase is required. It’s estimated that even the cheapest solution will cost around £150 per year with total costs to make the changeover being around £330.

HMRC have an approved list of software suppliers they will accept digital links with. Any software you purchase or subscribe to must explicitly say that it is MTD compatible (including VAT if applicable) and, if you work with an accountant, have the capacity to link with them too.

Also, consider that once set up it may be increasingly inconvenient to switch to another provider in the future and set up your digital links again and migrate all your financial data (e.g. uploaded receipt images). There are also some concerns that reliance on third party, potentially cloud-based solutions, may have data protection risks. A decision needs to be made, though, and it may be advisable to engage an accountant or financial professional.

There are two ways you can set up your accounts. If you’re using spreadsheets, you can keep doing that, but you’ll need some bridging software that reads the spreadsheet and transfers the information to HMRC without any more manual entry. Or, you can use a full accounting solution, generally provided by a software house. This one stop solution means you enter your accounting information and the same software will submit the information directly to HMRC.

Which software should I buy?

A couple of notes. 1) Costs are approximate and might have changed. Always check with the official provider for current pricing and terms. 2) FreeAgent is free of charge to customers of certain banks as part of their business account offer (NatWest, Royal Bank of Scotland, Ulster Bank, or Mettle)

Penalties for Late Submission

Apart from the costs of implementing a way to report for ITSA, you should also consider the penalties of poor compliance. Rather than set fines, HMRC are implementing a points-based penalty system.

One penalty point is incurred per late submission.

If these penalty points build up to four points, you will receive a £200 penalty.

If compliance improves, your points expire after 24 months.

HMRC can cancel or reset penalty points for certain circumstances e.g. insolvency.

£200 may not seem much but, if the penalty points remain high, the penalties will continue to be charged. If you reach the need for a penalty, you’ll have to avoid the next submission being delayed 3 months later. This might lead to a cycle of financial difficulty.

Businesses can no longer afford to leave their tax reporting till the end of the year to sort it out.

The Benefits of MTD

This obligation to report more regularly can be seen as an opportunity. Setting up a system to categorise all income (e.g. self-employment income, property income, dividend income, savings interest) and expenses as they occur will give you a clearer idea of your cash flow, current debtors and invoices that require chasing.

Developing a habit of updating your records once a week or once a fortnight means you will be clearer on where your money is going and will help you know how healthy your business actually is. You may even get better insights into which times in a quarter or year’s cycle are better for investing in your business or marketing campaigns. Better, clearer accounts gives you a better chance of successfully applying for funding or credit.

As you consider investing in software, consider automating other parts of what you do e.g. reading PDF bank statements or supplier invoices.

What to do now

Step 1: Register at Sign up for Making Tax Digital for Income Tax – GOV.UK

To successfully sign up for MTD ITSA, you must already have the following:

• A Government Gateway ID and password
• Your business’s VAT number (if applicable)
• A business email address
• Your National Insurance number
• Your company registration number
• Your Unique Taxpayer Reference (UTR)

Step 2: Connect your chosen MTD-compatible software to your HMRC online services account.

Step 3: HMRC will confirm your registration by email.

Recommendations for different sizes of business

Recommendations for specific sectors

The post My MTD Survival Guide: The Cost of Compliance (Part 2) appeared first on Clarity.