Verified & updated: February 2026 — reflecting latest ONS, DBT and HMRC releases
Contents
There are 5.7 million private sector businesses in the UK as of the start of 2025 — and the overwhelming majority of them are small. Whether you’re thinking of starting a business, researching the UK market, or looking for data to underpin a report, this page brings together the most important UK small business statistics in one place.
All figures on this page are drawn from authoritative sources: the Office for National Statistics (ONS), the Department for Business and Trade (DBT), HMRC, the Federation of Small Businesses (FSB), and the House of Commons Library. We review and update this page each time new data is released.
Jump to any section using the table of contents above, or scroll through to get the complete picture of UK small business in 2026.
UK Business Population 2025/2026
How many businesses are there in the UK, and how has that changed?
5.7m
Private sector businesses in the UK at the start of 2025
Source: DBT Business Population Estimates 2025
+3.5%
Increase in UK business population from 2024 to 2025
Source: DBT Business Population Estimates 2025
99.9%
Of all UK businesses are classed as SMEs (0–249 employees)
Source: DBT Business Population Estimates 2025
317k
New businesses were born (registered) in the UK in 2024
Source: ONS Business Demography 2024
280k
Businesses closed (ceased trading) in the UK in 2024
Source: ONS Business Demography 2024
+191k
Net increase — more businesses opened than closed in 2024
Source: ONS / DBT
71,935
New businesses added to the IDBR in Q4 2025 — up 10% on Q4 2024
Source: ONS Quarterly Business Demography, Q4 2025
+64%
Growth in UK business population since 2000 (from 3.5m to 5.7m)
Source: House of Commons Library, 2025
Business Size Breakdown
How UK businesses break down by employee count — and what that means economically.
| Business Size | Employee Count | Number of Businesses | % of All Businesses | Employment | Share of Turnover |
|---|---|---|---|---|---|
| Micro | 0–9 | 5,432,000 | 95.6% | ~7.8m | ~20% |
| Small | 10–49 | 211,000 | 3.7% | ~5.3m | ~14% |
| Medium | 50–249 | 38,000 | 0.67% | ~3.7m | ~17% |
| Large | 250+ | 8,335 | 0.15% | ~11.2m | ~49% |
| Total SMEs | 0–249 | 5,682,000 | 99.85% | ~16.9m | ~51% |
Source: DBT Business Population Estimates 2025. Turnover excludes financial and insurance activities.
3.2m
Sole proprietorships — 57% of all UK businesses by legal form
Source: DBT 2025
2.1m
Actively trading limited companies — 37% of total
Source: DBT 2025
75%
Of all UK businesses are non-employers — sole traders or owner-managers with no staff
Source: DBT 2025
£5.5tn
Total turnover of all UK private sector businesses in 2025
Source: DBT / Merchant Savvy 2025
Top Sectors by Number of Businesses
Which industries have the most businesses in the UK?
Source: DBT Business Population Estimates 2025 / ONS Business Activity, Size & Location 2025
Business Survival & Failure Rates
What are the chances of a new UK business surviving its first few years?
92.3%
1-year survival rate — businesses founded in 2022 still trading in 2023
Source: ONS Business Demography 2024
~60%
3-year survival rate — roughly 6 in 10 new businesses survive to year 3
Source: ONS Business Demography
~50%
5-year survival rate — around half of new businesses reach their 5th birthday
Source: ONS / Statista 2024
9.8%
Business death rate in 2024 — the lowest since 2016, down from 10.8% in 2023
Source: ONS Business Demography 2024
11.1%
Business birth rate in 2024 — broadly stable with 2023 (11.0%)
Source: ONS Business Demography 2024
9 yrs
Average age of UK companies in 2025
Source: Merchant Savvy 2025
| Year of Business | % Still Trading (2018 cohort) | Interpretation |
|---|---|---|
| Year 1 | 92.3% | Most new businesses make it through the first year |
| Year 2 | ~78% | Year 2 is often where cash flow pressure bites |
| Year 3 | ~63% | Businesses that reach 3 years are more likely to last |
| Year 4 | ~53% | Scale-up challenges hit mid-size growing businesses |
| Year 5 | 39.4% | Less than half of all businesses reach their 5th birthday |
Source: ONS / Statista (2018 cohort). Year 2–4 figures are approximate averages.
Small Business Employment & the UK Workforce
The scale of SME employment across the UK economy.
16.9m
People employed by SMEs in the UK (60% of all private sector jobs)
Source: DBT Business Population Estimates 2025
13.1m
People employed by small businesses (0–49 employees) — 47% of private sector
Source: DBT 2025
4.1m
Estimated number of sole traders in the UK
Source: DBT 2025
46%
Of UK adults have started a side hustle as an additional income source in 2026
Source: Startups.co.uk 2026
2.0%
SME hiring rate in late 2025 — sharply down from 7.6% the previous year
Source: ONS / Startups.co.uk 2026
4.5%
Average regular earnings growth in the 3 months to November 2025
Source: ONS Labour Market Statistics 2025
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Small Business Finance & Profitability
How profitable are UK small businesses, and how do they access finance?
78%
Of UK SMEs reported a profit or surplus in 2024 — back to pre-pandemic levels
Source: DBT Small Business Survey 2024
£70k
Average profit for a UK small business per year
Source: money.co.uk / DBT Small Business Survey
£13k
Median profit — the average is skewed upward by high earners
Source: DBT Small Business Survey 2024
£295k
Median average annual revenue for a UK small business
Source: money.co.uk 2025
3.75%
Bank of England base rate as of December 2025 — making borrowing more accessible
Source: Bank of England, December 2025
£2.8tn
Total turnover generated by UK SMEs in 2025 — 51% of all private sector turnover
Source: DBT 2025
- →78% of SMEs were profitable in 2024 — recovered from just 65% during 2021 at the height of post-pandemic pressure
- →23% of SME employers sought external finance exceeding £100,000 in 2024
- →London businesses have average turnover nearly double the national average — £1.7m per business vs £970k nationally
- →Small businesses (0–49 employees) contribute 34% of total private sector turnover despite making up 99.2% of all businesses
- →14% of SMEs made a loss in 2024; 8% broke even
Women & Diversity in UK Small Business
Representation of women and minority ethnic entrepreneurs in the UK business landscape.
14%
Of SMEs with employees are led by women or majority female management (2024)
Source: DBT Small Business Survey 2024
10%
Of women in the UK were early-stage entrepreneurs in 2023 (vs 12% of men)
Source: House of Commons Library 2025
18%
Of sole proprietor businesses are owned by women — consistent since 2015
Source: DBT Small Business Survey 2024
11%
Of UK self-employed business owners identify as from a minority ethnic group
Source: ONS / House of Commons Library 2025
6%
Of SMEs with employees are led by a minority ethnic management team in 2024
Source: DBT Small Business Survey 2024
19%
Of non-White people in the UK were early-stage entrepreneurs in 2023 (vs 9% of White people)
Source: House of Commons Library 2025
AI & Technology Adoption in UK Small Businesses
How are small businesses adopting artificial intelligence and digital tools in 2025/2026?
52%
Of UK businesses now use AI in some capacity
Source: Moneypenny Business AI Survey 2025
1 in 6
UK businesses (5+ employees) currently use AI, per DSIT’s official research
Source: DSIT AI Adoption Research, May 2025
70%
Of UK businesses either currently use or are actively considering AI
Source: Moneypenny 2025
43%
Of SMEs surveyed by BCC in 2024 had no plans to use AI (down from 48% in 2023)
Source: BCC / SME Digital Adoption Taskforce 2025
35%
Lack of expertise is the top barrier to AI adoption for UK businesses
Source: ANS / YouGov Survey, February 2025
30%
Of micro-businesses hesitate to adopt AI, citing cost and complexity
Source: ProfileTree / Moneypenny 2025
When UK businesses do use AI, the most common applications are:
Source: Moneypenny Business Survey 2025; DSIT AI Adoption Research (May 2025)
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Challenges Facing UK Small Businesses in 2026
What are the biggest pressures on small businesses right now?
- →National Insurance Contributions: The April 2025 increase in Employer NICs raised the cost of employing staff and caused SME hiring to drop sharply — from 7.6% to 2.0% by late 2025.
- →Minimum wage increases: A 4.1% rise in the National Minimum Wage in April 2025 added further cost pressure, particularly in retail, hospitality and care.
- →Making Tax Digital (MTD): From April 2026, MTD for Income Tax extends to self-employed people earning over £50,000. Small businesses must use HMRC-recognised digital accounting software.
- →Business rates: Despite a 15% reduction for pubs, the Autumn 2025 Budget announced further hikes to business rates for other commercial premises.
- →Cyber threats: 96% of all cyber-attacks target SMEs, yet only 17% of micro-businesses have invested in cyber insurance. Cyber incidents are rated the number one risk facing businesses globally in 2025.
- →Skills shortages: 26% of SMEs report struggling to recruit staff with the skills they need in 2025.
- →Inflation: The Consumer Price Index showed 3.6% inflation in December 2025; input cost inflation remains a concern — particularly in food, construction and logistics.
- →Global trade uncertainty: Threatened US tariffs of up to 25% on UK goods and broader geopolitical instability present export risk for UK businesses.
- →Employment Rights Bill: New legislation covering flexible working rights, zero-hours contracts and unfair dismissal protections is creating additional compliance requirements for small employers.
Regional Business Statistics
How does the UK business landscape vary by region?
| Region | Business Count Change (2024–2025) | Notable Facts |
|---|---|---|
| Northern Ireland | +1.5% | Biggest percentage increase in the UK; growth led by professional/scientific and agriculture |
| London | Positive | Average turnover per business is £1.7m — nearly double the national average of £970k |
| Wales | Positive | Highest average turnover growth in 2025 — up 16.4% to £623,780 |
| North East | Positive | Strong turnover growth; catch-up from historically lower-turnover region |
| East Midlands | -0.6% | Biggest percentage decrease; heavily influenced by removal of pension scheme VAT registrations |
| South West | Positive | Lower average turnover per employee (£145k vs London’s £296k) |
In terms of business closure rates, research by Avid Panda (2025) found that almost 40% of new UK businesses closed in the five years from 2020–2024. Regional variation is significant:
- →Hull has the UK’s highest new business closure rate at 44.6% of businesses incorporated since 2020
- →Stoke-on-Trent has a failure rate of around 32% for businesses opened since 2020
- →Norwich has been investing in small business support — a £1.1m Local Growth Plan announced for 2025
- →Higher failure rates in cities often reflect higher startup rates — more businesses being born means more also close
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Sources & References
- •DBT Business Population Estimates 2025 (October 2025)
- •ONS UK Business Activity, Size & Location 2025
- •ONS Business Births, Deaths & Survival Rates 2024
- •House of Commons Library: Business Statistics (2025)
- •DBT Small Business Survey 2024 (Published 2025)
- •ONS Quarterly Business Demography, Q4 2025 (January 2026)
- •DSIT SME Digital Adoption Taskforce Final Report (July 2025)
- •DSIT AI Adoption Research (May 2025)
- •Moneypenny: State of AI Adoption in UK Businesses (2025)
- •Bank of England Official Bank Rate, December 2025
- •Merchant Savvy UK Business Statistics 2025
- •British Chambers of Commerce AI & Digital Survey 2024
- •ANS / YouGov AI Barriers Survey (February 2025)
- •Avid Panda: UK Business Failure Rates 2020–2024 (November 2025)
- •Statista: ONS Business Survival Rates (November 2024)
Methodology note: This page combines official government statistics (ONS, DBT, HMRC) with reputable third-party research. Business population figures from DBT include estimated unregistered businesses; ONS IDBR figures cover only VAT/PAYE-registered businesses and will therefore be lower. All figures current as of February 2026.
Found this page useful? If you’re citing these statistics, please link back to this page as your source. We review and update all figures whenever new official data is released.
