Survey reveals 58% of UK small businesses plan staff pay rises in 2026 – despite 1 in 4 fearing pay talks

As the New Year brings a fresh start for many, a survey from business insurance experts at MoneySuperMarket highlights the pressures small business owners face. The poll of 250 UK sole traders and small business owners reveals that four in ten (42%) felt burnt out by the end of 2025, and as a result, more than half (51%) are resolving to change their work-life habits in 2026. 

Mental health drives plans for better work–life balance  

One in three (33%) small business owners say that running their own business is harming their mental health. And even though six in 10 (60%) feel that they’re already striking a healthy work–life balance, nearly half (47%) say they want to set stricter working hours and 46% plan to delegate more.  

58% of small business owners expect to be able to give pay rises in 2026  

The survey also reveals that nearly three-quarters of UK small business owners (around 4.16 million) believe they are good at managing their employees, however many say they struggle with difficult conversations. One in three dread giving feedback, and one in four fear discussing pay. While many business owners dread difficult conversations, 58% (excluding sole traders) expect to be able to offer staff pay rises in 2026, and a further 86% believe they will not need to make redundancies this year. This suggests that, despite concerns about tackling sensitive topics, business owners are starting 2026 from a position of relative confidence.  

Only 9,500 small businesses have life insurance plans in place to protect staff wages  

Whilst UK small business owners are concerned about their staff, the survey highlighted a gap in protection, with just 6% (around 9,500) of small business owners having life insurance in place that protects staff wages in the event of the owner’s death.  

To help small business owners understand the importance of employee life insurance, Alicia Hempsted, business insurance expert at MoneySuperMarket, says: “Life can be unpredictable, and when the unavoidable happens, it’s important that small business owners and their employees, are protected. This includes planning ahead for a range of scenarios and covering all circumstances. Having small business owner life insurance means that employees will be protected if the worst happens to the business owner.”