Late payment legislation, regulatory reform, tax simplification and new funding avenues are some of the major changes that the UK government has touted in its update on the progress on its Small Business Plan.

The government has made boosting the UK small business sector a key element of its economic growth strategy. Addressing the challenging trading conditions brought on by global volatility, Minister for Small Business and Economic Transformation Blair McDougall said that delivering on the Small Business Plan was essential to the UK economy. “We cannot deliver economic growth without our country’s 5.7m SMEs – the £2.8tn engine of the economy – firing on all cylinders.” 

The major changes so far

Late payments

The government introduced the Small Business Protections Bill to Parliament in May 2026, which aims to end late payments and unnecessarily long payment terms. This includes limits on maximum payment terms, mandatory interest on late payments and more powers for the Small Business Commissioner.

Regulatory reform

The government created a new Small Business Regulation Taskforce, running for eight weeks, which is co-chaired by the Federation of Small Businesses, to develop recommendations for regulatory reforms. The aim is to reduce the burden of regulation on SMEs by 25%. 

Regulators were given ‘sandboxing powers’ to allow companies to test innovations without legislative barriers, which will also help to shape the regulatory environment around those innovations.

Simplifying tax administration

The government announced reforms to modernise tax and customs systems as part of Tax Update 2026. It cites the rollout of Making Tax Digital (MTD) for Income Tax in April as a part of these ongoing reforms, alongside reforms to business rates administration. A timeline for e-invoicing for VAT has also been laid out, with requirements to come into effect from April 2029.

Business rates

With new permanently lower multipliers for eligible retail properties introduced and Small Business Rates Relief extended for second premises for an additional two years, the government aims to start its next phase, with a call for evidence on removing barriers to investment.

Energy costs

The Energy Independence Bill introduced an additional £2m in funding through the Made Smarter Adoption Programme to help SMEs lower their bills and become more energy efficient. SMEs can access funding for low carbon technologies through schemes such as the Boiler Upgrade Scheme.

Other changes 

The update also outlines the improved and expanded access to finance through the British Business Bank, the Growth Guarantee Scheme, Community Development Finance Institutions, Nations and Regions Investment Fund and Start Up Loans. 

Other measures include crackdowns on high street crime, incentives for adopting renewable energy, digital adoption programmes and support for specific sectors, such as the creative industries and pubs.

ICAEW’s role

ICAEW has actively contributed to shaping the approach and delivery of the Small Business Plan. Blair McDougall wrote to ICAEW to express his gratitude for the support over the course of the year.

“We want to thank the Institute of Chartered Accountants in England and Wales for your continued collaboration and support over the last year,” he said. “Your insight, data and feedback – and the voice of business you bring – have played an important role in shaping delivery of the Government’s Plan for Small and Medium Sized Businesses and ensuring it remains grounded in the real priorities facing small firms.”

Iain Wright, ICAEW’s Chief Policy and Communications Officer, welcomed McDougall’s response. “Small businesses are the real driving force of the British economy. And very often, those businesses rely on the trusted advice from a chartered accountant: that business acumen can be the difference between failure and success and moving from a start-up to scaling up growth,” he said. “I’m pleased that Blair McDougall, the Small Business Minister, recognises the contribution our members make.”

ICAEW is also a member of the Minister’s Small Business Growth Council and the Small Business Regulatory Taskforce, which feeds into progressing the plan. “The experience and insight that our members provide are fed into the heart of government policy,” said Wright. “We will continue to do so for the benefit of small businesses and the wider success of the UK economy.”