Why I’m Choosing Financial Security Over Business Growth

What Heavy Tax Rates and Policy Uncertainty Taught Me About De-Risking My Business

Like many business owners, I recently decided not to replace a staff member who left in November. At first, I told myself it was because of the rise in Employer National Insurance. But when I took a step back, I realised something bigger was happening—I’d lost my appetite for growth.

I hadn’t noticed the shift at first. After all, I’ve been running businesses for over 20 years, and I’ve seen plenty of tax and policy changes come and go. But this time was different.

Instead of planning expansion, I was diverting my focus to personal financial security—paying down debt, using tax incentives for green tech, and shifting excess business cash into investments rather than reinvesting in staff and growth.

At first, these choices seemed like smart financial decisions like buying electric company cars. But when I looked at the bigger picture, I saw what was really happening: I was de-risking my life instead of growing my business.

And I’m not the only one.

A recent survey found that 82% of SMEs are rethinking recruitment and investment due to rising costs. Meanwhile, 60% of businesses expect to raise prices just to absorb additional taxes.

One manufacturer told the British Chambers of Commerce:
“The increase in NI will probably mean we have to make redundancies to cover additional costs.”

Another business said:
“NICs will have a direct impact on profitability, therefore we’re stopping investment in people and growth.”

But for me, this isn’t just about one tax hike.

It’s about a bigger question that every business owner should ask themselves:
Why would I take risks to grow when the system punishes me for doing so?

Why Growth No Longer Makes Sense

I run my business with my wife. Recent Corporation Tax changes meant that £30,000 of our household income was hit with a 7.5% tax increase. At the same time, changes to National Insurance thresholds reduced tax for employees. But we’re now seeing further increased costs for our company via the changes to employers NI. As a result, these NI changes will wipe out £5,000 of our business profits, directly impacting our household income.

Then there’s the bigger personal tax trap:

• £50,000 - £60,000: Effective tax rates exceed 50% due to Corporation Tax and dividend taxes. 
• £60,000 - £100,000: Loss of Child Benefit pushes the tax rate above 60%.
• £100,000 - £125,140: Loss of the Personal Allowance results in a 60%+ tax rate.

I feel I’m well paid, with child benefit repayment now starting at £60,000 I’m planning on drawing dividends to that level.

Let me explore the hypothetical concept of going for growth and making £10,000 extra profit via my limited company. After all, business growth should be about enjoying these spoils of success when they come so I’d want to increase my personal earnings. Surely an extra £10,000 would make my personal finances look so much better? But it doesn’t really…..

I need to pay 26.5% in corporation tax. That leaves me with £7,350 in my company after tax. I then decide to draw this out as a dividend. I’m a higher-rate taxpayer so now I need to pay my 33.75% in dividend taxes. So I’m now left with just less than £4,870. But hang on, this extra money means I’m now in the child benefit repayment bracket so I’m left with £3,763. Overall, I’m left with just 37.6% of that original £10,000. If I go for even more growth and push to the £100,000 income threshold I’m still only left with 37.6% up to £80,000. My tax rate then improves again between £80,000 and £100,000 meaning I’m keeping 48.7%. Some business owners already earn up to the £100,000 threshold where they’ll be losing their personal allowance by going for growth. For these people, they see a whopping 68% of that £10,000 gone in tax leaving them with just £3,180.  

My example above doesn’t even factor in the changes to employers' NI. These changes will mean that over 70% of earnings could be lost to tax. 

I think you can see, for business owners, pushing past these thresholds is barely worth it. Every extra pound earned is taxed so heavily that it makes far more sense to de-risk rather than expand.

I looked at buying another accountancy firm recently. On paper, it seemed like a logical step - expanding the business, increasing turnover, and creating new opportunities.

But when I started running the numbers, reality set in:

• The bank wanted security over my home.
• Interest rates were high (thanks to base rate increases).
• There was a hefty arrangement fee just to access the funds.
• I needed to bring a significant amount of personal cash to the table.

All of this before I even made a single penny of profit.

And for what? If the acquisition was successful, the government would take over 60% of everything I earned.

At that point, I had to ask myself:

“Why would I take on that level of risk when I could just invest in personal financial security instead?” I pay all my utilities and mortgage costs out of taxed money, what happens if I don’t need to pay them?

And that’s when I realised - I wasn’t just avoiding a bad business deal …I was avoiding a bad system.

How the Government Is Nudging Business Owners Toward Risk-Aversion

I’ve already started using tax-efficient strategies to offset my family’s costs. We took advantage of electric car tax breaks—not just because they were green, but because they reduced how much money I actually need to draw out of the company. I could sell the personal cars and release equity. A BUS grant saw a heat pump installed. That led to another shift:

• The money we would have used for business expansion went into paying down personal mortgage debt and topping up ISAs instead.
• Our business saved on tax, but we benefited personally far more on my earnings from £50,270 to £60,000 
• Without realising it, I’d shifted from investing in growth to investing in security.
• I’ll be mortgage-free in the next 3 months plus protected from energy cost increases. Just think of the flexibility I’ll have. 
• I’ve become more philanthropic, being generous with sponsorship to give children access to free sports kit. Gifts to my favourite charities. I’m excited to support some of those who need it. I want to create impact, choice and security.

But this is the psychological contradiction of current tax policy:

The government incentivises businesses to make tax-efficient investments in assets like green tech, but disincentivises them from making tax-inefficient investments in staff and expansion.

The result? Business owners are unintentionally de-risking instead of growing. I’ve just seen the areas of opportunity in the tax system and shifted my focus. Is this really what the tax policy hopes to achieve? 

Growth Means More Than Just Money—It Means Change

This isn’t just about tax and risk. Growth means change.

Expanding my business doesn’t just mean higher taxes—it would fundamentally change how we work.

Growth means hiring more staff, which in turn means:

• Less direct interaction with clients
• More systemisation
• A shift away from the personal touch that sets us apart

A business isn’t just numbers on a spreadsheet. It’s about relationships, service, and quality.

And here’s the real question:
Am I willing to change my entire business model just to justify growth that the tax system discourages?

Final Thoughts: I Haven’t Lost My Ambition—But I’ve Changed My Strategy

The government claims to support small businesses, yet its policies actively discourage entrepreneurship and expansion.

I haven’t lost my ambition—I’ve lost my incentive.

When growing my business means risking my home, paying tax rates over 50%, and seeing minimal reward for the effort, it’s simply not worth it.

So instead of taking on more staff, I’m securing my personal finances.
Instead of chasing revenue, I’m investing in efficiency.
Instead of growing my business, I’m making sure it needs to generate less cash to support my life.

And, most importantly, I’m protecting the quality and personal service that my business was built on.

It’s not about avoiding responsibility. It’s about making the smartest financial decisions possible.

I’d love to hear from other business owners: Are you focusing on de-risking rather than expanding?

A final word.

You might argue that it’s unfair to compare company and individual tax rates side by side. But for small business owners, the distinction is often meaningless. In many cases, a company is simply a vehicle to manage risk, while personal earnings are just retained within a corporate structure. The reality is that for small businesses, the line between company and individual finances is far thinner than it seems.

While small companies may only contribute 30-40% of Corporation Tax revenues, they employ over 60% of the UK workforce. This isn’t about party politics—many of the policies I’ve discussed have spanned both Conservative and Labour governments. My concern isn’t ideological; it’s about economic stability.