Ask a founder what has changed this year, and you rarely get one answer. You get several.
Employer National Insurance went up from 13.8% to 15% in April 2025. The point where it kicks in dropped too, down to just £5,000 per employee, per year.
Then wages rose again. The National Living Wage climbed to £12.71 an hour in April 2026, for anyone over 21.
Business rates jumped at the same time. The figures used to work out rates were reset in April 2026, and office values rose by an average of 14.5% across England and Wales. London saw the steepest rises of all.
Even founders who never signed an office lease have felt it. Shared office buildings were reclassified this year, and it stripped many small businesses of rates relief they used to rely on. That’s added an estimated £5,400 a year to the cost of a co-working desk, according to analysis from consultancy ChamberlainWalker.
None of these changes look big on their own. Add them together, though, and something bigger is happening. A lot of the costs founders used to treat as fixed have all moved in the same direction, in the space of about twelve months.
Why Is It More Expensive to Run a UK Startup in 2026?
Nothing Gets Signed Lightly Anymore
Founders haven’t panicked. But they have got more careful.
Hiring has slowed right down. SME employment growth has fallen to around 2% this year, according to analysis from Startups.co.uk. The report points straight at rising National Insurance and wages as the cause.
Borrowing has got harder too, or at least it feels that way. Around 41% of founders now say high borrowing costs are their biggest barrier to growth.
What’s changed isn’t ambition. Founders still want to grow. What’s changed is how willing they are to lock themselves into something they can’t undo.
A three-year office lease, a big new hire, a long supplier contract. All of these look far riskier when the cost of doing business keeps shifting underneath them.
So founders are choosing flexibility instead, even when it costs a little more per unit. A monthly contract beats a five-year one. A freelancer beats a full-time hire. Anything you can walk away from beats anything you can’t.
What’s Happening With Storage Tells a Small Part of the Story?
Space is one place where this shift already shows up in real numbers.
According to The Box Co.’s breakdown of UK storage habits, more than 680,000 UK businesses now use self-storage instead of committing to a traditional warehouse. On average, that saves them somewhere between 40% and 60% on the cost of space.
Most of those businesses are small. 61% of business storage customers have just one to three staff. Nationally, 24% of all self-storage customers are now businesses, not individuals.
Ask those businesses why they use storage, and the answers line up with everything else in this story. Roughly 48% say they simply don’t have enough space. 21% use it as a holding area before distribution. 7% use it specifically for seasonal stock.
None of those reasons need a five-year lease.
Where the Sums Start to Change?
Picture a small online shop. Two or three staff, selling homeware, or clothing, through a handful of marketplaces. At first, the stock lives in a spare room. Simple enough.
Then orders grow, and the spare room stops being enough. That’s the moment a founder faces a real decision. A warehouse on a five-year lease is a serious commitment, especially when nobody really knows what next year’s order numbers will look like.
A flexible option, paid for by the month, or even by the box, solves the immediate problem. It doesn’t ask the business to predict its own future.
The same logic is spreading everywhere else too. Office space, software subscriptions, even staff. Founders are leaning on freelancers and contractors rather than hiring people they might later need to let go.
New Businesses Keep Starting Anyway
Despite all this, people haven’t stopped starting businesses.
The latest ONS data shows 71,935 new businesses were added to the UK’s business register in the last quarter of 2025 alone. The transport and storage sector, which includes much of the self-storage industry, was one of the fastest-growing for new business creation. It was up 17.2% on the year before. Closures in that same sector fell by more than a fifth.
Running a business in the UK costs more this year than it did last year. That much is clear, whichever number you look at.
What’s changing isn’t whether people start businesses. It’s how carefully they decide what to commit to, once they have.
