Small businesses

Small Businesses

Small businesses, independently owned and operated companies are limited in size and in revenue depending on the industry.  A local bakery, grocery shop, restaurant, taxi operator, building contractor that employs 10 people is an example of a small business.

Labour is committed to supporting the SME sector as it is at the heart of the UK economy.


FSB – National Federation of Self Employed & Small Businesses Limited describes the importance of SME’s to the UK market –


  • There were a record 5.4 million private sector businesses a the start of 2015.
  • This is an increase of 146,000 since 2014 and 1.9 million more since 2000.
  • The number of employing businesses increased by 35,000 and the number of non-employing businesses by 112,000, with the annual growth for both groups being around +3%.

SMEs and the Economy:

  • Small businesses accounted for 99.3% of all private sector businesses at the start of 2015 and 99.9% were small or medium-sized (SMEs).
  • Total employment in SMEs was 15.6 million; 60% of all private sector employment in the UK.
  • The combined annual turnover of SMEs was £1.8 trillion, 47% of all private sector turnover in the UK.

Composition of the business population:

  • In 2015, there were 1.3 million employing businesses and 4.1 million non-employing businesses. Therefore, 76% of businesses did not employ anyone aside from the owner.
  • The overall business population includes three main legal forms: there were 3.3 million sole proprietorships (62% of the total), 1.6 million companies (30%), and 436,000 ordinary partnerships (8%).
  • There were 2.4 million businesses registered for VAT or PAYE, 44% of the total population. A further 3.0 million are not registered for either VAT or PAYE.

Trends in the business population:

  • There has been sustained growth in the total business population, with increases of +55% since 2000 and +3% since 2014.
  • The majority of population growth since 2000 has been due to non-employing businesses, which accounted for 90% of the 1.9m increase.
  • The growth in numbers of businesses last year reflected the composition of the business population in 2014, with non-employing businesses accounting for three quarters of the overall 146,000 increase.
  • The number of companies has increased in recent years and increased again in the last year by 117,000 (+8%). In contrast, the number of ordinary partnerships continued to fall, with a 21,000 (-5%) reduction from 2014. The number of sole proprietorships increased by 50,000 (+2%).

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