2024 has been a dramatic year for startups and small businesses. A change of government, a raft of new employment laws and tax changes and a complex economic environment have made it a challenging year. But technological developments, new tax reliefs and flexible working rules helped create new opportunities for agile startups who can leverage them and for entrepreneurs about to start a business.
This month-by-month review of 2024 will list the highs and lows of the year for small businesses. We’ll highlight the big issues affecting startups, from changes to angel investor limits to the impact of a new Labour government as well as showcase the views of small business owners themselves on the changes that have affected their hiring strategies and ability to grow their businesses.
Let’s get stuck in.
January
The New Year started with the latest edition of the UK’s longest-running list of new businesses that made their mark in the prior 12 months. 2024’s Startups 100 ranks the top 100 new businesses across all sectors, featuring exciting new ideas, technology and innovation that will power the UK economy for years to come and help the UK lead in many areas.
A panel of experts painstakingly sift through the business ideas, their execution and early results, to judge which new companies deserve a place on the list. It’s a celebration of how the UK’s best entrepreneurs are helping the country maintain its position as one of the leading territories for the development of new technologies, business innovation and growth streams.
In 2024, AI content moderation firm Unitary took the No.1 spot, followed by social care provider Lottie in No.2 and the UK’s first e-bike manufacturer Maeving in the bronze medal position. Will your company be featured in 2025’s list? Not long to wait!
Employer’s view – Serial entrepreneur and investor James Dooley comments
“Flexibility is already baked into how we work. But now, there’s a formalized expectation, which means more admin and balancing competing requests. For example, I’ve had to hire additional project managers because if too many people request adjustments at the same time, it creates operational gaps. It’s yet another layer of complexity for SMEs that don’t have the HR infrastructure of a larger company.”
February
February saw predictions that the right to request flexible working hours would allow millions of workers more flexibility on selecting their working hours when introduced in the new 2024/25 tax year.
Nicknamed the ‘Predictable Working Bill,’ it would have allowed casual workers and those on zero-hours contracts to be able to request a more standardised working pattern hours under new employment laws.
In actual fact this proposal was watered down and integrated into the Employment Rights Bill and gives workers the right to a contract that reflects the number of hours they regularly work.
March
The government agreed to the reversal of the angel investment rule that would have disproportionately affected female investors. The investment limit was raised to £170,000 from £100,000 in January. It immediately attracted lots of criticism for its impact on female investors and also for discouraging angel investment more widely.
It would have hindered women from investing in startups and seed businesses because, on average, women earn less than men. The rule was reversed in the March 2024 Spring Statement.
Employer’s view – Eamonn Turley, CEO of Multi Quote Time
“The reversal of the proposed rule was critical for us. We were in the midst of a funding round targeting female angel investors, and the initial proposal would have reduced our potential investment pool by an estimated 35%.
“By preventing this restriction, we successfully secured £250,000 in additional funding from two female investors who specialize in insurtech startups. This funding directly enabled our platform’s AI-driven quote comparison technology development.”
April
April saw the introduction of the new 2024/25 UK tax rates, bands and allowances. For employees, the biggest benefit for many would be the 2p cut in Class 1 National Insurance, down from 10p to 8p (it was also cut in January from 12p to 10p).
Business owners did not benefit in the same way and faced deductions in the annual allowance for dividends. These were cut in half from £1,000 to £500, following a reduction in 2023/24 from £2,000 to £1,000. It meant an additional rate taxpayer would typically pay £197 more in tax as a result.
Similarly the capital gains allowance was reduced from £6,000 to just £3,000 following a cut from £12,300 to £6,000 in 2023/24 tax year.
Employer’s view – Stephen Do, affiliate marketing expert, and founder of UpPromote
“The new tax allowances for 2024/25 are a mixed bag. They’re supposed to help businesses, but I don’t feel a noticeable impact yet. The tax codes are so convoluted that even the “benefits” don’t always feel beneficial. I’ve spent more time than I’d like with my accountant this year, trying to figure out how to structure things. Simpler would be better.”
May
In May, the spotlight was on the cost to business and UK productivity of days lost due to ill health. This issue has a major impact on startups and small businesses who have fewer staff to plug gaps.
The COVID-19 pandemic was a major catalyst for the rise. As well as the actual number of days lost to the virus, the longer-term impact on several million UK workers of mental health issues and long COVID has contributed to a higher proportion of people of working age being unable or limited in their ability to work.
According to the CIPD, the average rate of employee absence for 2023 was 7.8 days per employee per year, up from 5.8 days since its last report in November 2019, just before the pandemic struck.
But could the real reason be the low rate of sick pay offered by the UK? The UK offers just 17% of average earnings, among the worst in Europe.
June
Another big issue in 2024 was the return to office mandates imposed by many companies. The headlines focused on the household names such as Lloyds Banking Group, Manchester United and BT, but it is an issue that affects small businesses too.
The arguments for and against depend on the nature of the business and type of work the employee does, whether it is customer facing or regular meetings are required.
Again, the pandemic affected this issue as businesses were forced to adapt, helped by technology, enabling many business functions to be carried out remotely. Home working, hybrid policies and remote work are here to stay in some form but the pros and cons of working in person at an office will remain a factor in arguments about the UK’s poor productivity.
Employer’s view – Ramzy Ladah, a personal injury lawyer at Ladah Law Firm
“Businesses may need to spend more on office spaces or tools to support hybrid setups. The real cost here isn’t just financial—it’s about keeping the workforce engaged during the transition.”
July
Consequences for businesses don’t come much more baked in than when there is a General Election that unseats one party. In July, the UK overwhelmingly elected a new Labour government.
Although there was no immediate impact, any new government means businesses of all sizes need to review what the likely impact of new policies will mean for them and begin planning to mitigate and prepare.
Employer’s view – Ramzy Ladah, a personal injury lawyer
“Labour’s focus on workers’ rights could mean stricter rules for businesses. This might mean revisiting contracts, looking at how wages are handled, or making changes to align with new employment standards.”
August
In August, Innovate UK, part of UK Research and Innovation was under fire for not meeting its promises to pay 50 Women in Innovation Awards to small businesses led by women.
The organisation receives government funding that must be spent on specific qualifying projects. It had a total of £3.75 million to distribute but only 25 of the 50 awards were granted to women business owners as part of a funding competition.
Innovate UK backtracked after protests from entrepreneurs picked up steam on LinkedIn. The company issued a statement acknowledging the “confusion and concern” the mess has created, saying “That’s on us and we own that. Sorry that it’s impacted so many people.”
September
It was actually on October 1st that The Employment (Allocation of Tips) Act 2023 was introduced. The new rules have a major impact on hospitality businesses, but also apply to other professions where workers receive tips, such as hairdressing.
The new Code of Practice on tipping states that employers must demonstrate “fairness and transparency.” The law aims to ensure that the workers who earn the tip receive the tip and to combat a growing problem whereby the business itself banks the tip to improve profit margins.
The new Act will impact many small businesses because they form a large proportion of businesses in the hospitality sector.
Employer’s view – Eamonn Turley, CEO of Multi Quote Time
“This change prompted us to review our internal compensation structures. We’ve implemented a transparent tip-sharing policy for our customer support team, which has improved team morale and reduced staff turnover by 18% in the past quarter.”
October
As part of the Autumn Statement, a package of reforms linked to workers’ rights and conditions was announced, known as the Employment Rights Bill. This included changes to sick pay and maternity pay, whereby all employees are entitled to either benefit from day one of their time off.
Other parts of the bill included changes to parental leave and a reduction in the length of time employers can keep employees on probation from two years to six months.
Employer’s view – Stephen Do, affiliate marketing expert, and founder of UpPromote
“The Employment Rights Bill is one I’m watching closely. Affiliate marketing software isn’t labour-intensive in the traditional sense, but we still employ developers, customer success reps, and marketing leads.
“The changes around redundancy, gig workers, and compensation could ripple through the tech industry. If it raises the cost of hiring or adds more bureaucracy to employment contracts, it’s going to slow down growth. Startups thrive on agility, and anything that chips away at that is a problem.”
November
The run up to Labour’s Autumn Budget was lengthy, the predictions and leaks numerous, but overall it was a mixed bag for startups and SMEs.
Labour would argue that public finances were in such a poor state that tax rises were inevitable, but small businesses can counter that their ability to kickstart economic growth has been hampered by increases in Employer’s NI, the minimum wage and Capital Gains Tax.
Employer’s view – Serial entrepreneur and investor James Dooley
“The rise in national insurance contributions is painful. For small businesses, cash flow is everything, and any increase in employer costs eats into growth potential. I’ve had to reevaluate hiring plans for the next year. Instead of taking on new full-time staff, I’ll likely rely more on contractors or freelancers to control costs.”
Stephen Do, affiliate marketing expert, and founder of UpPromote
“For small tech companies like mine, these changes don’t just nibble at the margins—they take a real bite out of hiring capacity.”
December
For many small businesses, December is crunch time, an opportunity to make a good proportion of the year’s profit in one month for retailers, pubs, restaurants and events companies.
In response to the criticism the Labour government received regarding its Autumn Budget, the Chancellor Rachel Reeves used Small Business Saturday (December 7th) to reiterate her support to small businesses.
She visited Leeds Corn Exchange in her constituency to make the point that the smallest of businesses, those that employ less than five people will be exempt and the employment allowance, the amount that can be reclaimed from a business’s NI liability has been increased from £5,000 to £10,500. According to the government this means 865,000 employers will not pay any NI next year. There are 1.4 million private sector businesses in the UK that employ staff.
According to research from American Express, Small Business Saturday saw more than 10 million Brits spending an estimated £634 million in-store and online, in stormy conditions and helping small businesses reach their festive revenue goals.
Conclusion
2024 has been an eventful year for small businesses. A change of government after 14 years inevitably brings alternative policies that create changes to tax, allowances, rates, employment rules, working procedures and more.
Add on the breakneck speed of technological change, in particular AI, and it is clear startups have had many important decisions to make, tweaks to business models and strategies to fine tune in 2024 to be ready to make 2025 a year to grow and a year to remember for the right reasons.
Benjamin Salisbury is an experienced writer, editor and journalist who has worked for national newspapers, leading consumer websites like This Is Money and MoneySavingExpert.com, business analysts including Environment Analyst, AIM Group and written articles for professional bodies and financial companies. He covers news, personal finance, business, startups and property.
