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Posted: Tue 18th Aug 2026
5 min read
New data from Enterprise Nation's latest Small Business Barometer reveals a warning light flashing red in the UK economy – three in four founders now earn less than a full-time minimum wage salary.
The question for the government is no longer whether to act, but how quickly.
Enterprise Nation is calling for four targeted measures that could ease the pressure where the data highlights the deepest issues.
The Employment Allowance offsets up to £10,500 of employer National Insurance.
But HMRC's rules exclude companies where the director is the only person paid above the threshold. That catches sole directors and firms whose staff earn below it.
Among owners who employ staff, 65% now pay themselves under £20,000, up from 48% a year ago.
The costs behind that shift are easy to date – April 2025's rise in employer National Insurance to 15%, and the threshold drop from £9,100 to £5,000 per employee.
Extending the allowance and uprating it as the frozen £5,000 threshold bites harder, would put money back where the squeeze is sharpest.
Some 42% of small businesses were paid late in the past year, nearly double the level recorded through 2023 and 2024.
The Small Business Commissioner puts the money tied up in overdue invoices at £26 billion at any one time.
The Bill announced in the King's Speech caps payment terms at 60 days, makes interest on overdue invoices mandatory and strengthens enforcement.
Passing it quickly, and resourcing the Small Business Commissioner to enforce it, would release cash founders have already earned.
When a customer sits on your invoice, your own pay is the easiest cost to cut.
Through our Powering Local Businesses campaign, we've called for practical help with energy costs for the smallest firms.
Households got relief at the last Budget. Small businesses didn't.
Network charges are forecast to rise sharply for some firms into 2027. Businesses have no price cap.
That cost lands before the owner's own draw, and our data shows exactly where the impact falls.
Most limited company owners pay themselves through a small salary topped up with dividends. That route has become steadily less generous.
The tax-free dividend allowance has been cut from £5,000 as recently as 2018 to £500 today.
From April this year, dividend tax rates rose by two percentage points. Income tax thresholds are frozen until 2031.
The ICAEW calculates that the personal allowance would be almost £3,000 higher had it kept pace with inflation.
A founder's shrinking pay packet is being taxed as if it were growing, but the Autumn Budget on 28 October should draw a line.
The Treasury is accepting Budget representations until 9 September, and Enterprise Nation will be making exactly this case.
Our Small Business Barometer shows what happens when owners run out of slack.
Appetite for external funding has fallen to 40%, the lowest since 2023. Among those still seeking finance, 40% now want less than £10,000, up from 27% last year. Credit card borrowing has nearly doubled.
Founders are patching holes rather than funding growth. As Enterprise Nation CEO Aaron Asadi says in the report, this is owners telling us plainly that the environment doesn't support the risk of borrowing to grow.
An economy that needs small firms to invest cannot afford that signal.
Seventy-six per cent of small business owners now pay themselves less than £20,000 a year, up from 63% in 2025.
A full-time employee on the National Living Wage earns around £24,800 a year from April 2026. Three in four founders now take home less than that.
This is a deliberate choice, made under pressure. Owners are protecting their teams, their suppliers and their customers by paying themselves last.
Founders earning less than a full-time minimum wage salary is a signal, and government should read it. The full findings are in Enterprise Nation's Small Business Barometer for Q2 2026.
If you have evidence of the squeeze in your own business, tell us and we'll put it in front of government officials.
