Millions of Small Traders Pay Less Than Half Living Wage

By the Editorial Team · Sunday, August 9, 2026

A recent study by Enterprise Nation found that 76% of UK small business owners pay themselves less than £20,000 annually, earning significantly below the National Living Wage while working nearly 50 hours per week. This reflects growing financial pressure on entrepreneurs, who are prioritizing staff wages and facing increased late payments despite new legislative efforts, prompting calls for tax relief and support measures.

Millions of small business owners in the UK are paying themselves significantly less than the National Living Wage as they strive to keep their enterprises operational, according to a recent study. The research, conducted by Enterprise Nation through its Small Business Barometer, found that approximately 76% of small traders paid themselves under £20,000 annually, despite working an average of nearly 50 hours per week. This equates to an hourly rate of around £7.75, substantially below the current National Living Wage of £12.71 for adults over the age of 21.

The study highlights a widening gap compared to data from the previous year, which showed fewer small business owners earning below £20,000. The situation is particularly acute for those who employ staff; 65% of these owners reported paying themselves less than £20,000, compared to 48% a year earlier. Many entrepreneurs are choosing to prioritise staff wages and operational costs over their own pay amid ongoing economic pressures.

Aaron Asadi, CEO of Enterprise Nation, described the situation as “unsustainable,” noting that business owners are absorbing financial strains personally to support their teams and customers. He emphasized the need for targeted measures to alleviate the financial pressures on small business owners, including addressing the growing problem of late payments, which the study identified as affecting 42% of small firms in the past year—an increase from figures reported in 2023 and 2024.

Late payments continue to pose a significant challenge despite legislative efforts such as the Commercial Payments Bill introduced in the 2026 King’s Speech. The proposed legislation aims to limit large companies’ payment terms to 60 days, require mandatory interest on overdue invoices, and enhance enforcement against chronic late payers. Despite these initiatives, small businesses face an estimated £26 billion in outstanding invoices at any given time.

The survey also revealed a cautious approach among small business owners toward borrowing. Only 40% expressed plans to seek external funding within the next 12 months, the lowest proportion since the barometer’s inception in spring 2023. Furthermore, those intending to secure loans are increasingly seeking smaller amounts, with 40% planning to borrow less than £10,000, up from 27% the previous year.

Small business owners have called on Chancellor John Healey to consider reducing the tax burden in the upcoming Budget to improve their financial resilience. The findings paint a clear picture of entrepreneurs who are working longer hours and accepting lower pay to sustain their operations in a challenging economic environment.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.