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Rachel Reeves must resist the temptation to raise income tax because doing so would be a disaster for small and medium-sized enterprises (SMEs) that already prop up the UK economy under crushing pressure.

SMEs are the backbone of Britain, employing 16 million people and accounting for over 60 per cent of private sector jobs. Yet we are treated like an afterthought, constantly squeezed in all directions from rising operational costs, inflation, supply chain disruptions, and the relentless tax burden.

In fact, the very idea that the Chancellor might raise income tax would be the final nail in the coffin for the SME family businesses, the local shops, and the innovative start-ups - they are risk-takers and job creators, punishing them with higher income tax is not just bad economics, it’s morally indefensible.

A tax hike isn’t a sterile line item on a spreadsheet. It’s not just about the business owners either, it’s about the teams they fight to keep employed, a wage frozen, a hire not made, an innovation shelved.

I know from experience that many SME owners are already sacrificing enough, many haven’t taken proper salaries in years, even dating back to the pandemic. They’ve weathered Brexit bureaucracy, energy price shocks, labour shortages, and still show up, creating jobs, paying VAT, corporation tax, business rates, National Insurance, and more. Raising income tax now, effectively penalising the people holding the line, is short-sighted, negligent and insulting.

It’s also economically illiterate, you don’t stimulate growth by stripping disposable income from entrepreneurs, freelancers, and hardworking employees. You don’t encourage enterprise by making it more painful to succeed. You support growth by fuelling ambition, not taxing it out of existence.

Instead of reaching for the easy, yet damaging, lever of income tax, Rachel Reeves should focus on real support such as tackling late payments, simplify tax for small firms, and create meaningful incentives for investment and upskilling. I believe that raising income tax is a just a lazy fix with damaging long-term consequences.

If Rachel Reeves wants Britain to grow, she must reject income tax rises and stand with the SMEs driving our recovery.

Today, many personal and business finance apps, including our own, use advanced technology and, in some cases, AI to provide insights, savings suggestions, forecasts, and spending trackers to help people manage their money more effectively and they've come a long way in making budgeting more accessible, automated, and convenient.

But while automation can simplify financial planning, users should avoid fully replacing their own judgment, common sense, and ongoing learning with technology alone. Overreliance on apps without a solid understanding of personal and business finances can lead to several pitfalls.

For example, users might blindly follow automated recommendations without adjusting for life changes or unexpected expenses, leading to cash flow issues. In some cases, setting aside too much money based on default suggestions, without evaluating whether it's affordable or necessary, can cause strain or limit financial flexibility. Platforms might also misinterpret irregular income patterns or fail to account for nuanced personal goals, leaving users underprepared or misaligned.

That’s why we take a different approach. We aim to educate our users on the fundamentals: how much to set aside each month, what to prioritise, and how to maintain transparency and control from the start. We encourage people to make adjustments based on their real-life needs, not just what an algorithm says.

Ultimately, personal finance apps and platforms should be seen as supportive tools, not substitutes for financial literacy. When used thoughtfully, they can empower users but without understanding the “why” behind the numbers, even the smartest automation can lead to mistakes.

What do the latest April figures (£80.2bn total receipts, £4.3bn increase) tell us about the UK's economic health?

The latest figures from HMRC, paint a picture of fiscal resilience, but not necessarily a thriving economy. The rise can be attributed to frozen tax thresholds which have pushed more people into higher tax bands, alongside inflation and structural changes to National Insurance.

When you put this alongside the 0.3% drop in GDP during April, the biggest monthly fall we’ve seen in a year and a half, it’s clear that the rise in tax receipts isn’t down to a surge in productivity or business activity. What we’re really seeing is the impact of the current tax setup and the timing of policy changes, rather than genuine economic growth.

So, while the headline figures may suggest robustness, it’s not a moment to celebrate booming growth, it’s a reminder of how reliant public finances have become on carefully engineered tax mechanisms rather than true economic momentum.

Are there any interesting/notable changes in April's receipts?

Yes, the April data reveals some shifts in tax receipts that hint at behavioural and policy-driven trends in the economy.

Stamp Duty, for example, saw a 32% increase, with receipts rising to £1.8 billion and Inheritance Tax being another area, with receipts up by 14% year-on-year, which could be linked to a mix of rising property values and frozen thresholds.

How significant is the £2.9bn increase in Income Tax/NICs and what does this signal?

The £2.9 billion increase in Income Tax and National Insurance receipts was arguably the most significant element in April’s tax picture. Bringing the total up to £47.9 billion for the month, this reflects not only increased earnings among UK workers but also the impact of the recent changes to employer NI Contributions (NIC). From April 6, the employer NIC rate rose from 13.8% to 15%, with a lower threshold of £5,000 now in place which has brought in an extra £2.1 billion in April.

This early return from the NIC rise highlights how quickly policy changes can bolster public finances, but it also raises questions about the cost to employers. My own business community has voiced concerns that these additional costs may lead to reductions in hiring, increased prices for consumers, or cutbacks in other areas.

Should SME advisers be preparing clients for policy changes based on revenue sources/patterns?

I'd say rather general best practice that will future proof them, their business, cashflow and tax liabilities. The general economic and political climate is likely to remain incredibly tough for SMEs for the foreseeable, sadly. We should be using every tactic and asset available to us – and whether it’s manually putting money aside for a rainy day or automating savings through platforms like Money Squirrel, it’s not just a nice to do but what I see to be a business imperative.

What tax planning advice should accountants give clients given these trends?

Open a savings account (or more than one). If you already have one, check you're getting the highest rate available to you within your criteria. If nothing else, take the VAT proportion of incoming payments and put it in there - earning you valuable interest while waiting for HMRC. Wherever possible, build up a cash buffer for your business and have it earning something in the background.  

What do UK startups need to know when looking for investment?

If it’s your first time raising, it’s important if not critical to build a warm network of key people however you can. It takes way longer than you think it will, if you’re not already well connected in the world of angels, VCs and family offices. Use LinkedIn to research and network as much as you can.

What should they be aware of before reaching out to VCs and other potential investors?

Everyone’s default starting position will be a ‘no’ (and understandably so). Build a thick skin and get used to the word no.

Build human connections first because very few people ever want to be pitched to blind and ensure you are seen as much as possible on LinkedIn for creating credible and thought-provoking content.

Be as prepared as you can be in terms of your business, its plan and trajectory and of course your figures.

Is there anything that they should be aware of that’s specific to the UK?

It’s a really tough climate in the UK at the moment to raise. Pre-seed requirements moved up one and are now much closer to seed, which makes it really tough to get going for the first time. But don’t let that deter an entrepreneurial spirit. Keep moving forward one step and one day at a time.

Although May is officially recognised as Small Business Month and Mental Health Awareness Month, every month should hold this importance, especially for micro and small business owners.

Running a company while handling its finances is no simple feat and for many entrepreneurs, money worries are ever-present, with effective cash flow management often the key to both business stability and personal contentment.

At Money Squirrel, we understand the deep link between managing finances and the psychological wellbeing of founders.

Difficulties with cash flow are among the top causes of stress for entrepreneurs, impacting not just their companies’ survival but also their health and overall happiness.

A recent Intuit QuickBooks survey we discovered found that 57% of UK small business owners have faced cash flow issues, while nearly half (49%) cite managing cash as the most stressful aspect of their entrepreneurial journey.

Our own cash flow management app is designed to ease these burdens. It automates critical tasks such as VAT calculation, tax management, and payment allocation, and enables business owners to “squirrel away” funds for future needs, even earning interest on unused balances.

Certainly, by streamlining these processes, we help founders step away from the relentless juggling of accounts and instead concentrate on growing and innovating their ventures, confident that their finances are secure and working for them around the clock.

But the benefits go beyond just numbers. When entrepreneurs are freed from financial anxiety, they can reclaim valuable time, time to invest in themselves, their families, and their communities. This ripple effect can lead to more creative business ideas, stronger team morale, and a healthier work-life balance for everyone involved.

Our own founder, Andreea Daly, comments: “As a startup owner myself, I’ve personally experienced the frustrations of handling cash flow, spending endless hours on VAT calculations and future planning. Juggling everything was overwhelming, so I built a company to remove that pressure, not just for myself, but for fellow entrepreneurs as well.”

The stress caused by financial uncertainty can result in sleepless nights, heightened anxiety, and even physical health problems for small business owners. By making financial management easier and more automated, Money Squirrel not only strengthens business resilience but also lessens the mental strain that comes with money worries.

Andreea adds: “Ultimately, this is about more than just business survival, it’s about empowering entrepreneurs to thrive. Supporting their financial health is a direct way to boost their mental wellbeing, making every month feel like a celebration of both business achievement and personal growth. With the right tools, founders can focus less on stress and more on their vision, building a stronger, happier future for themselves and their teams.”

This impact is especially meaningful during a month dedicated to both business success and mental health awareness, serving as a powerful reminder that championing entrepreneurs means supporting their wellbeing all year round.

As a self-employed yoga teacher based in Lichfield, Staffordshire, one of our early customers Katie Russell built her business around helping others find balance, but behind the scenes, her own financials needed a little help along the way.

Like many solopreneurs and micro-business owners in the UK, Katie launched her wellness venture with passion and purpose, but with little formal guidance when it came to money management.

“I knew how to teach yoga, build a loyal following and run a class, but I didn’t invest as much time in understanding the importance of setting aside funds for a rainy day or my tax bill,” she admits.

In her first couple of years as a sole trader, Katie made the mistake that countless small business owners quietly make - assuming that staying afloat month-to-month meant she was doing fine. But when her first tax bill landed, a sinking feeling hit hard.

“I just didn’t have sufficient funds to cover it,” she says. “It was a horrible feeling. I wasn’t being reckless, I was just never taught how to structure things properly.”

This experience, while common, is rarely talked about. Many solopreneurs, freelancers and creative professionals work in isolation, often picking things up as they go along, with few formal systems or support to fall back on. The assumption is that you’re either good with money or you’re not, but for people like Katie, there’s a grey area filled with trial, error, and costly lessons.

After using spreadsheets to stay on top of her finances, Katie discovered Money Squirrel and added: “I only wish I’d found it sooner because It’s changed the way I think about money entirely.

“I love that I can now set aside money for tax automatically. I’ve even got a pot for a future retreat in Portugal I’m planning. It feels empowering rather than scary.”

What sets Money Squirrel apart, Katie believes, is that it understands the mindset and chaos of solopreneur life, irregular income, busy schedules, and the need for tools that work with, not against, you.

“There’s not enough practical, emotional or educational support for people going it alone in business,” she says. “We’re often juggling everything and just hoping we’re doing it right.”

Founder of Money Squirrel Andreea Daly says: “We’re delighted that our platform has helped to structure Katie’s finances better and importantly, add interest on a monthly basis.

“For thousands like Katie across the UK, managing money while running a one-person business can feel overwhelming. But tools like Money Squirrel are proving that with the right support, and a few smart habits, even the most anxious entrepreneur can go from financial firefighting to future planning.”