How Many SMEs Are in the UK in 2026? Latest Business Population Statistics

What are the main sources for SME counts in the UK?

There are three key official sources that matter for this question, and they each measure slightly different things.

1. Business Population Estimates (BPE)

The government’s Business Population Estimates provide the only official estimate of the total number of UK private sector businesses, including:

• Businesses registered for VAT and or PAYE
• Unregistered businesses, such as self employed people below the VAT threshold

BPE gives a snapshot at the start of each calendar year, which is why BPE 2025 tells us about the position at 1 January 2025. The next edition, BPE 2026, is scheduled for autumn 2026, so the official 1 January 2026 figures are not available yet.

2. UK business; activity, size and location

The ONS bulletin UK business; activity, size and location 2025 uses the Inter Departmental Business Register and only counts firms that are registered for VAT and or PAYE.

It reports that there were 2.73 million VAT and or PAYE businesses in the UK as of March 2025, a 0.4 percent increase compared with March 2024. Around 76.7 percent of these registered businesses are companies or public corporations, while only 19.8 percent are sole proprietors or partnerships².

3. Business demography, UK

The ONS Business demography, UK: 2024 bulletin describes business births and deaths among VAT and or PAYE registered businesses.

According to the latest release and the House of Commons briefing:

• 317,000 business births in 2024
• 280,000 business deaths in 2024
• A business birth rate of 11.1 percent and a death rate of 9.8 percent, the lowest death rate since 2016³

These numbers show that, among registered businesses, more firms are opening than closing, which is consistent with the net increase we see in BPE 2025.

What we know for sure about SMEs in the UK at the start of 2025

BPE 2025 provides the headline business population figures as of 1 January 2025. The key points are:

• Total private sector businesses: 5.7 million businesses in the UK at the start of 2025
• Small businesses with 0 to 49 employees: 5.64 million
• Medium sized businesses with 50 to 249 employees: 38,435
• Large businesses with 250 or more employees: 8,335¹

That means:

• SMEs with 0 to 249 employees make up around 99.85 percent of all private sector businesses
• Large businesses account for only about 0.15 percent of the business count

The House of Commons Library briefing brings these data together and states that there were 5.7 million SMEs in the UK in 2025, including 5.4 million micro businesses, so that 99.9 percent of all businesses were SMEs and around 95 percent were micro businesses⁴.

Employment and turnover share

BPE 2025 also estimates that, at the start of 2025:

• Total private sector employment: about 28.1 million jobs
• SME employment: about 16.9 million jobs, roughly 60 percent of private sector employment
• Small businesses: around 13.1 million jobs, about 47 percent of private sector employment
• Medium businesses: around 3.7 million jobs, about 13 percent
• Large businesses: about 11.2 million jobs, roughly 40 percent^{1 4}

On turnover, once financial services are excluded:

• SMEs generate around 51 percent of private sector turnover, about £2.8 trillion
• Small businesses account for roughly 34 percent of turnover
• Medium businesses generate about 17 percent
• Large businesses generate around 49 percent^{1 4}

These shares give important context. Almost all businesses are SMEs, and they account for a majority of jobs and more than half of turnover.

How many new businesses started, and how many closed, before 2026?

To understand how the SME population might have changed between the start of 2025 and the start of 2026, we look at business births and deaths among registered firms.

Business births and deaths in 2024

The House of Commons briefing, drawing on Business demography, UK: 2024 , reports that^{3 4}:

• There were 317,000 business births in 2024
• There were 280,000 business deaths in 2024
• The business birth rate was 11.1 percent of active VAT and or PAYE registered businesses
• The business death rate was 9.8 percent, the lowest since 2016

Every UK region and nation saw more business births than business deaths in 2024. London, the North West, the North East and the West Midlands had particularly high birth rates.

Quarterly evidence for 2025

The ONS quarterly business demography series, highlighted on the Activity, size and location page, gives an early read on 2025.

It notes that in Quarter 3 of 2025:

• There were 73,450 business creations, a modest decrease compared with Q3 2024
• There were 63,205 business closures, about 1.9 percent lower than Q3 2024

While these quarterly figures do not yet add up to a full year, they suggest that the pattern of more births than deaths continued into 2025.

It is important to remember that all of these birth and death statistics relate to VAT and or PAYE registered businesses. The broader BPE population, which includes unregistered micro businesses, will move in the same direction over time, but the counts cannot be combined directly.

Estimating how many SMEs are in the UK in 2026

Because the official Business population estimates 2026 release is not due until autumn 2026, any number we use today for the start of 2026 has to be a clearly labelled estimate.

Here is a transparent way to approach that estimate.

Step 1: Start from the official 2025 stock

We know that at the start of 2025 there were 5.7 million private sector businesses, almost all of them SMEs^{1 4}.

Step 2: Look at recent growth rates

BPE 2025 states that the private sector business population:

• Increased by 191,000 businesses between the start of 2024 and the start of 2025
• This was a growth rate of 3.5 percent

Over a longer period from 2010 to 2025, the number of private sector businesses grew from around 4.5 million to 5.7 million, an increase of about 26.9 percent^{1 4}.

The House of Commons briefing also shows that the number of businesses increased in every UK region between 2024 and 2025, with particularly strong growth in London and the South East.

Step 3: Consider births and deaths

Among VAT and or PAYE registered businesses, there were 317,000 births and 280,000 deaths in 2024. That is a net gain of 37,000 registered businesses, on top of any changes among unregistered firms^{3 4}.

The quarterly statistics for 2025 suggest that births continued to outnumber deaths, though at slightly different rates in different quarters. This supports the idea that the business population continued to grow during 2025, rather than contracting.

Step 4: A conservative growth range for 2025 to 2026

The jump from 2024 to 2025, at 3.5 percent growth, was relatively strong and largely driven by a rebound in non employing and unregistered businesses after earlier declines. With economic conditions in late 2025 still challenging, it is reasonable not to assume another 3.5 percent surge.

Instead, for estimation purposes, we can work with a more conservative range:

• Low growth scenario: around 1.5 percent growth in the total business population between the start of 2025 and the start of 2026
• Moderate growth scenario: around 2.5 percent growth

Applying those growth rates to the 5.7 million businesses at the start of 2025 gives:

• Low scenario: 5.7 million × 1.015 ≈ 5.8 million businesses
• Moderate scenario: 5.7 million × 1.025 ≈ 5.85 million businesses

Working estimate for SMEs in the UK in 2026

Putting the pieces together, a fair way to describe the situation is:

The latest official statistics show 5.7 million private sector businesses in the UK at the start of 2025, almost all of them SMEs. Based on recent growth in the business population and the fact that business births have exceeded business deaths, a reasonable estimate is that the UK has somewhere in the region of 5.8 million private sector businesses at the start of 2026. The exact figure will be confirmed when Business Population Estimates 2026 is published.

For the rest of this article, when we refer to SME numbers in 2026 we are talking about this 5.8 million estimate, grounded in the official BPE, ONS and House of Commons data but clearly separate from the published 5.7 million figure for 2025.

What the 2026 SME landscape looks like, based on the latest data

Even without the final 2026 counts, the 2025 statistics tell us a lot about the structure of the SME population.

Employers versus non employers

BPE divides businesses into those that employ staff and those that do not. At the start of 2025:

• There were about 4.27 million non employing businesses, around 75 percent of all private sector businesses
• There were around 1.42 million employer businesses with at least one employee, about 25 percent of the total¹

Most of the year on year increase between 2024 and 2025 came from non employing businesses, which rose by about 201,000, while the number of employing businesses actually fell by around 9,000¹.

That pattern is likely to carry through into early 2026, with micro and one person businesses continuing to make up the bulk of SME counts, even though larger employers drive a greater share of jobs and turnover.

By region and nation

BPE 2025 and the House of Commons briefing show how businesses are distributed across the UK:

• England has around 5.0 million private sector businesses
• Scotland has around 361,000
• Wales has around 194,000
• Northern Ireland has around 139,000^{1 4}

Within England:

• London has around 1.0 million private sector businesses
• The South East has around 0.9 million
• London and the South East together account for just over one third of all UK businesses
• The North East has the fewest businesses of the English regions, with around 167,000^{1 4}

The ONS UK business bulletin confirms that registered business counts also rose slightly between March 2024 and March 2025, so the regional pattern is likely to look similar in early 2026.

By sector

The House of Commons briefing, drawing on BPE and ONS data, highlights that in 2025 the sectors with the largest numbers of businesses were⁴:

• Construction, making up around 15.8 percent of all businesses
• Professional, scientific and technical services, around 13.7 percent
• Wholesale and retail, around 10.2 percent

The ONS UK business bulletin similarly reports that the largest industry group among registered businesses is professional, scientific and technical activities, accounting for around 15.3 percent of registered firms^{2 4}.

Most of these sectors are dominated by SMEs, particularly construction and professional services, so the sector mix is likely to remain similar as we move into 2026.

What do 2026 SME numbers mean for access to finance?

Combining the BPE and ONS data with SME lending statistics from sources such as UK Finance and the British Business Bank, a few important finance themes stand out:

• A very large, mostly small borrower base. With an estimated 5.8 million private sector businesses at the start of 2026 and the vast majority employing fewer than 10 staff, lenders are dealing with a huge number of potential SME customers, many of them micro businesses.
• Most SMEs are still cautious about external finance. Recent British Business Bank analysis suggests that fewer than half of smaller businesses currently use external finance, and that a significant minority have no intention of borrowing. This means that the SME finance market is competitive, but not saturated from a borrower point of view.
• Births and deaths drive churn in the lending market. With around 317,000 new registered businesses opening in 2024 and 280,000 closing, lenders see a constant flow of new potential customers and a similar flow of firms exiting or restructuring. That churn is a big part of why lenders rely on data sources, sector codes and automated checks when assessing applications.
• Regional and sector differences affect product fit. High business density in London and the South East, and the dominance of sectors like construction and professional services, shape which finance products are most common, from unsecured working capital through to asset finance and invoice finance.

For an individual SME, the takeaway is that you are operating in a market where lenders see a lot of businesses like yours on paper, but where many of those businesses are not actively borrowing. How clearly you present your numbers and funding case makes a real difference to outcomes.

How Funding Agent helps SMEs navigate this landscape in 2026

At Funding Agent we use these national statistics as context for the work we do with individual SMEs every day. We know that you are one of millions of small businesses, and we also know that lenders assess you through a mix of data points, from Companies House filings and SIC codes through to bank statements and management accounts.

Our platform helps you turn that complexity into practical options. We work with a broad panel of UK banks, challenger lenders and specialist funders across:

• Unsecured and secured business loans
• Asset finance for vehicles, machinery and equipment
• Invoice finance for B2B firms
• Revenue based advances and merchant cash advances for card taking businesses

If you are planning your funding strategy for 2026, a useful starting point is to model repayments and cash flow using our calculators:

• Compare term borrowing costs with the business loan calculator and unsecured business loan calculator.
• Plan equipment purchases using the asset finance calculator.
• Explore working capital options with the invoice finance calculator and merchant cash advance calculator.

Once you have a sense of what is affordable, you can speak to our team about real lender offers and how to present your business in the best possible light, whether you are a brand new micro business or a growing employer with plans to scale.

Sources

1. Department for Business and Trade, Business population estimates for the UK and regions 2025: statistical release , 2 October 2025.
2. Office for National Statistics, UK business; activity, size and location: 2025 , 24 September 2025.
3. Office for National Statistics, Business demography, UK: 2024 , 20 November 2025.
4. House of Commons Library, Business statistics, Research Briefing SN06152 , 3 December 2025.