This article will summarize key findings and trends from the report, covering headline statistics, trends, composition, legal forms, VAT and PAYE registration, regional distribution, industry specifics, and uncertainties in the estimates. All data are extracted from Companies House and the official gov.uk website.

Overview of UK Businesses 

• The number of private sector businesses in the UK at the start of 2023 was 5.6 million.
• Small businesses (0 to 49 employees) made up 5.51 million.
• There were 36,900 medium-sized businesses (50 to 249 employees).
• The number of large businesses (250+ employees) stood at 8,000.
• Compared to 2022, the private sector business population increased by 0.8% (46,000 businesses).

Trends in the Business Population

Between 2010 and 2023:

• Business numbers grew from 4.5 million in 2010 to 6.0 million at the start of 2020, then decreased to 5.6 million by 2023.
• The peak growth rate was 6.8% between 2013 and 2014.
• There was a significant decline of 6.5% between 2020 and 2021 due to the Covid-19 pandemic and Brexit.

Between 2022 and 2023:

• The business population grew by 46,000 (0.8%).
• Employing businesses decreased by 3,000 (0.2%), while non-employing businesses increased by 49,000 (1.2%).

Composition of the 2023 Business Population

The UK’s private sector is primarily made up of small and non-employing businesses:

• 99.9% of businesses are SMEs (0 to 249 employees).
• Small businesses (0 to 49 employees) account for 99.2% of the total business population.
• Large businesses (250+ employees) make up 0.1%.

Small Businesses Dominate

Small businesses, defined as those with 0 to 49 employees, are the backbone of the UK’s private sector. With 5.51 million such enterprises, they constitute a whopping 99.2% of the business population. This category includes micro-businesses (1 to 9 employees), which alone represent a substantial portion of the business landscape.

Medium-Sized and Large Businesses

Medium-sized businesses (50 to 249 employees) number 36,900, while there are 8,000 large businesses (250+ employees). Despite their smaller numbers, large businesses play a critical role in the economy, contributing significantly to employment and turnover.

Legal Form

The private sector consists of three main legal forms:

• Sole Proprietorships: 3.1 million (56% of total businesses).
• Companies: 2.1 million (37%).
• Ordinary Partnerships: 365,000 (7%).

Sole Proprietorships

Sole proprietorships are the most common legal form, making up 56% of the total business population. This form is popular due to its simplicity and ease of setup, often involving self-employed individuals.

Companies and Partnerships

Companies, which include limited liability entities, account for 37% of businesses. Ordinary partnerships, though fewer in number, still play a significant role in certain industries, comprising 7% of the total.

Registration for VAT and PAYE

At the start of 2023:

• 2.6 million businesses were registered for VAT or PAYE, representing 48% of the total population.
• 2.9 million businesses (52%) were unregistered.

Unregistered Businesses

A significant portion of businesses, especially non-employing ones, operate without registering for VAT or PAYE. These unregistered businesses, often sole proprietorships or small partnerships, represent a substantial yet less formalized segment of the economy.

Regional Distribution

Business numbers vary significantly across the UK:

• England: 4.9 million businesses
• Scotland: 298,000 businesses
• Wales: 219,000 businesses
• Northern Ireland: 122,000 businesses

Regional Insights

London and the South East of England boast the highest concentrations of businesses, reflecting the economic hubs’ vibrant commercial activities. Conversely, regions like the North East and Northern Ireland have fewer businesses, indicative of different economic landscapes and opportunities.

Industries

At the start of 2023:

• The largest number of SMEs were in Construction (16% of SMEs).
• Significant SME sectors include Professional, Scientific, and Technical Activities (14%) and Wholesale and Retail Trade (10%).

Sector Breakdown

The distribution of businesses across various sectors highlights the diversity of the UK economy. Construction leads with the highest number of SMEs, followed closely by Professional, Scientific, and Technical Activities, and Wholesale and Retail Trade. These sectors are critical for employment and economic stability.

Uncertainty in Business Population Estimates

Estimates of unregistered businesses are based on Labour Force Survey data, introducing some uncertainty. For instance, the 95% confidence interval around the total number of businesses at the start of 2023 was ±134,000, making the total estimate between 5.421 million and 5.689 million.

Detailed Breakdown and Analysis

Employment Trends

Between 2022 and 2023, total employment across all private sector businesses increased from 27.1 million to 27.5 million, an increase of 1.7%. Employment in SMEs rose from 16.4 million to 16.7 million, maintaining a 61% share of total employment.

Turnover Insights

In terms of turnover, SMEs generated approximately £2.4 trillion, accounting for 53% of the total turnover of £4.5 trillion in the private sector. Small businesses alone contributed £1.6 trillion.

Legal Form Dynamics

From 2010 to 2023, the number of sole proprietorships increased by 380,000 (14%), while the number of companies surged by 782,000 (62%). However, the number of ordinary partnerships declined by 90,000 (20%).

Changes from 2022 to 2023

• The number of companies decreased by 12,000 (1%).
• Sole proprietorships increased by 46,000 (1%).
• Ordinary partnerships increased by 13,000 (4%).

Geographic and Sectoral Variations

UK Regions

• London and the South East of England had the highest business density.
• The North East had the fewest businesses among the English regions.

Sectoral Insights

• Construction, Professional, Scientific, and Technical Activities, and Wholesale and Retail Trade are key sectors with high SME presence.
• Manufacturing, Administrative and Support Service Activities, and Wholesale and Retail Trade are notable for their large business contributions.

Final Thoughts

The UK’s business landscape is dynamic and continuously evolving. The growth of small and non-employing businesses highlights the entrepreneurial spirit within the country, even amidst economic challenges like the pandemic and Brexit