UK Businesses still expect growth

From London to Lanarkshire, optimism is making a quiet comeback. Despite persistent inflation, rising costs, and global uncertainty, most UK SMEs are still predicting stronger turnover and profitability as 2025 enters its final quarter. According to Lloyds Bank’s latest Business Barometer, 70% of businesses expect turnover to increase. That’s a clear rise from 62% at the end of 2023 (Lloyds Banking Group, 2025).

This wave of confidence is echoed elsewhere. The Guardian reports that 73% of firms feel optimistic about profitability, a level of sentiment not seen in nearly a decade. Still, warning signs remain. A recent Federation of Small Businesses (FSB) survey found that 27% of SMEs expect to shrink, sell, or shut down. Just 25% are anticipating growth (The Times, 2025).

So the question is this: how do you ride the momentum while staying protected against risks?

What the Growth Outlook Means for SMEs

A Divided Landscape

Some sectors, especially retail, are riding high on consumer demand and rising real incomes (The Times, 2025). Others, particularly smaller firms facing tax strain, wage pressures, and rigid lending terms, are finding it harder to stay competitive.

This is the reality of two SME groups:

• One is actively investing and building for growth

• The other is holding back, managing risk, and reevaluating strategy

Knowing where your business stands is the first step toward choosing the right next move.

Why Optimism Still Holds Its Ground

Confidence Is Up Across Industries
Lloyds’ data shows business confidence at its highest point since 2015, with more sectors reporting positive trading outlooks.

SMEs Remain the Backbone of the UK Economy
With 99% of UK businesses classified as SMEs, contributing close to £2.8 trillion in turnover and employing around 60% of the private sector workforce (Gov.uk, 2024), their performance is central to national growth.

Stability Still Signals Strength
Not every business is booming, but 58% expect turnover to stay stable. In this volatile market, holding steady is a sign of resilience (ONS, 2025).

Four Practical Ways to Turn Optimism into Action

So what does this mean for your business, and how do you move from cautious hope to confident action before year-end?

1. Diagnose Where You Are
If your outlook is positive, identify what’s fueling it. Is it better demand, more efficient systems, or new contracts?

If you’re feeling uncertain, be honest about what’s holding you back. Is it cash flow, tax obligations, rising input costs, or limited credit?

Without clarity, there can be no direction.

2. Build a Growth Strategy While Conditions Are Right
If things are moving in the right direction, this is your window to act:

• Develop cash-flow forecasts that account for multiple scenarios

• Tap into R&D tax credits, innovation grants, or sector-specific support

• Adopt digital tools that cut manual work and increase output

3. Strengthen Your Defences
For businesses under strain, protection comes first:

• Review all cost centres and tighten up supplier terms

• Streamline operations to increase agility and preserve capital

• Explore flexible financing solutions that do not overburden your balance sheet

4. Use Professional Advice to Navigate Change
A good accountant or adviser is more than a compliance partner. They can help you plan, compare performance across your sector, and make decisions rooted in data instead of instinct.

At Benson Wood & Co, this is exactly what we do: give business owners the clarity to move forward with purpose.

As summer winds down, the growth story for UK SMEs remains mixed. Three out of four expect progress. One in four is planning for contraction or closure. Optimism is a powerful thing, but it only pays off if backed by smart planning, financial discipline, and decisive leadership.

By understanding where you stand, investing where it counts, managing your risk, and using the right advice, you can stay in the lead, not fall behind.

At Benson Wood & Co, we don’t just help you keep up. We help you move ahead with confidence and clarity.

Automation: Trend or Transformation?

In the rapidly changing field of finance, Scottish SMEs are increasingly questioning whether automation and artificial intelligence (AI) represent the future of bookkeeping or if they’re simply the latest industry trend.

Understanding Automation: Robotic Process Automation (RPA)

Automation in bookkeeping primarily involves Robotic Process Automation (RPA), software designed to handle repetitive tasks traditionally performed by humans. Tasks such as invoice processing, payroll management, and bank reconciliation, which previously consumed considerable time, are now swiftly managed by these digital assistants. Unlike humans, bots do not tire, allowing processes such as month-end closings to be executed significantly faster and with fewer errors.

RPA vs AI: Structured Tasks vs. Adaptive Insights

However, RPA is not a “thinking” technology. These bots are highly effective at structured tasks but lack the capability to adapt or make judgments independently. Artificial intelligence, on the other hand, leverages machine learning and pattern recognition to go beyond simple automation, predicting transaction categories, identifying anomalies, and providing insightful financial analytics.

Cautious Adoption with Rising Enthusiasm

Interestingly, adoption of these technologies has been slower than one might anticipate. A recent Scottish Enterprise survey (2025) highlighted that while only around 27% of Scottish SMEs currently use AI or automation, a substantial 82% plan to integrate these technologies soon. This indicates a cautious but growing enthusiasm driven largely by potential productivity and efficiency improvements.

Clear Benefits of Automation and AI

Indeed, the benefits are substantial. RPA can reduce operational costs by as much as 20–30%, improve accuracy, and significantly enhance processing speed. Additionally, automation frees employees from repetitive tasks, allowing them to shift focus toward more strategic, client-centric roles, which not only improves job satisfaction but also enhances overall client experience.

Challenges and Risks of Automation

Nevertheless, the shift towards automation and AI introduces its own challenges. Over-automation, where processes are automated without sufficient oversight or a well-designed workflow, can lead to amplified errors (ICAEW, 2020). Furthermore, implementation complexities, ongoing maintenance needs, and security risks regarding sensitive financial data remain pressing concerns.

The Evolving Role of Human Accountants

Crucially, though, automation and AI are not poised to replace human accountants altogether. Rather, these technologies represent an evolution of the role. Accountants will increasingly become strategic advisors, leveraging the speed and accuracy of AI tools while adding essential human judgment, ethical reasoning, and personal insight—qualities that machines cannot replicate.

Bruce Cartwright, CEO of ICAS, reinforces this perspective, stating clearly that the role of accountants will evolve rather than vanish, with professionals focusing more on interpretation and strategic direction, rather than merely “producing numbers” (ICAS CEO Letter, 2025).

Strategic Integration: Humans and Machines Working Together

Thus, the future of bookkeeping isn’t about choosing between human or machine; it’s about strategically integrating both. Automation and AI will handle repetitive, rules-based tasks, providing timely and accurate data. Humans will continue to oversee, interpret, and apply this data strategically.

The Way Forward for Scottish SMEs

For Scottish SMEs, the challenge will be ensuring they adopt these new tools carefully, leveraging their strengths without compromising on data integrity, security, or the essential human element of financial advisory. Those who succeed in striking this balance will find themselves well positioned for sustainable growth and competitive advantage in an increasingly digitised landscape.

Conclusion: A Brighter, More Strategic Future

In conclusion, automation and AI represent not the end of traditional accountancy, but its transformation into a more insightful, efficient, and strategic profession. For Scottish businesses willing to embrace these changes thoughtfully, the future indeed looks bright

The National Insurance Rise – What’s Happened?

From 6 April 2025, Chancellor Rachel Reeves introduced a 1.2% increase in Employer National Insurance Contributions (NICs) on all salaries above £5,000. The government says this step is needed to stabilise public finances. But many Scottish business owners question its fairness—especially with no matching increase in devolved support.

The immediate result is simple but significant: it now costs more to employ people in Scotland. For small and medium-sized enterprises (SMEs), which make up a large share of Scotland’s business community, the pressure is particularly acute.

What the 2025 Employer NIC Increase Means for Scottish Employers

Higher Payroll Costs Per Employee

This NIC increase means that any salary over £5,000 now attracts an additional 1.2% in employer NICs. For example, if you employ someone earning £35,000 per year, your NIC liability on that one salary could increase by more than £350 annually. This is not limited to new hires — it applies to your entire workforce, across all departments and roles.

Margins are already tight in sectors like hospitality, construction, and retail. This NIC increase could make some roles financially unsustainable.

Increased Pressure on Short-Term Cash Flow

Employer NICs are paid monthly or quarterly along with PAYE liabilities. That means this rise puts immediate pressure on your cash flow, not just your annual accounts. Any pre-existing plans for capital investment, hiring, or business expansion may now need to be paused or reviewed.

For many SMEs, this change creates the unwelcome scenario of having to choose between long-term strategic growth and maintaining day-to-day payroll obligations.

Five Practical Ways to Offset the NIC Increase

Rather than scaling back your workforce, here are five accountant-approved strategies that can help manage the cost increase without sacrificing growth or jobs.

Use the Employment Allowance

The Employment Allowance is a UK-wide government relief that allows eligible employers to reduce their annual employer NICs bill by up to £5,000 per tax year. This relief is designed to ease the burden of employment costs, particularly for smaller businesses.

Once your business is registered and eligible, the allowance can be automatically applied through your payroll system. Despite being available for several years, many businesses still either fail to claim it or assume incorrectly that they are ineligible.

We strongly encourage reviewing your eligibility — especially if your staffing levels, payroll thresholds, or business structure have changed.

You can check your eligibility and learn more here:
Employment Allowance: Check if you’re eligible – GOV.UK

Introduce Salary Sacrifice Schemes

A salary sacrifice arrangement enables employees to voluntarily reduce their gross salary in exchange for non-cash benefits such as enhanced pension contributions, cycle-to-work schemes, or electric vehicle leasing.

These schemes can lead to NIC savings for both the employer and employee. However, they must be carefully designed to ensure no employee’s adjusted salary drops below the National Minimum Wage.

For best results — and to remain compliant with HMRC requirements — such schemes should be implemented in consultation with your accountant or payroll advisor.

Use Contractors or Freelancers – With Caution

In some cases, businesses can reduce their NIC liabilities by engaging self-employed contractors or freelancers, rather than hiring new full-time staff. When a contractor is genuinely self-employed and working outside IR35 rules, the business is not required to pay employer NICs or the Apprenticeship Levy.

However, this only applies if the working relationship is clearly independent. Under the IR35 off-payroll working rules, if a contractor is deemed to be operating like an employee, the business (or the agency) becomes liable for NICs and must operate PAYE.

Careful status assessment is essential — using HMRC’s CEST tool or professional guidance — before relying on this strategy.

One of the most effective ways to reduce employment costs — without reducing your team — is by embracing automation. Many businesses still rely on staff for repetitive manual tasks that could easily be handled by affordable software tools.

Whether it’s managing staff rotas, processing invoices, generating reports, sending customer communications, handling inventory, or onboarding new team members — automating these tasks can save hours each week. That means your existing team can focus on higher-value work, such as customer service, sales, or operational improvements.

Smart use of automation can reduce your dependency on extra admin support, helping you control Employer NIC costs over time. Importantly, many automation tools — including HR software, workflow platforms, or scheduling systems — are fully deductible as business expenses for tax purposes.

If your business is growing but you’re not ready to hire more staff, now is a great time to review which processes could be automated instead.

Reassess Your Payroll and Remuneration Strategy

Now is an ideal time to revisit your payroll structure with your accountant. There may be more tax-efficient ways to reward team members, such as structured bonuses, non-cash benefits under HMRC thresholds, or director dividends (where appropriate).

For owner-managed businesses, this is especially relevant — as small tweaks in remuneration structure could lead to significant NIC savings over the year.