£29bn lost to sickness as UK SMEs say tax incentives key to health investment and productivity

• UK SMEs lose £29 billion annually due to sickness-related productivity drops.
• 27% of SMEs have no wellbeing budget at all.
• 58% of SMEs agree that current taxation policies actively hinder their ability to invest in wellbeing initiatives.
• 66% of SMEs would be more likely to invest in health-related benefits if stronger tax incentives were available.

New research commissioned by specialist employee benefits provider, Unum UK, reveals that UK small and medium-sized businesses (SMEs) are losing £29 billion a year due to employee sickness but wellbeing remains chronically underfunded.

The research, conducted by YouGov across more than 2,000 businesses, reveals a clear disconnect between the scale of the UK’s workplace health challenge and the support in place to address it.

Over a quarter (27%) of SMEs and nearly half (47%) of micro businesses report having no wellbeing budget at all. At the same time, just 6% of SMEs and 3% of micro businesses say government guidance on their wellbeing responsibilities is clear - despite the billions lost each year to employee sickness.

Mark Till, Chief Executive Officer at Unum UK, said: “SMEs losing £29 billion a year to sickness-related productivity drops should be a serious wake-up call and a clear opportunity for smarter policy. Ahead of the Autumn Budget and in light of the recent Keep Britain Working report, we are calling on government to step up by offering clearer guidance, introducing meaningful tax incentives and raising wellbeing standards. It’s time to remove the barriers and make it easier for SMEs to invest in their people.”

Despite limited investment in employee wellbeing, SME businesses show a clear appetite for change:

• 58% of SMEs agree that current taxation policies actively hinder their ability to invest in employee wellbeing.
• 66% of SMEs say they would increase spending on wellbeing initiatives if stronger tax incentives were introduced.
• 57% of SMEs say a more supportive regulatory environment would encourage greater investment in employee wellbeing.

Mark Till continues, “The Keep Britain Working review has reignited the conversation around productivity, workforce health and the critical role SMEs play in driving economic recovery. Now is the time to act and unlock greater investment in employee wellbeing. UK SMEs are under pressure: sickness absences are at their highest in 15 years, productivity is flatlining and budgets are tighter than ever. The appetite to invest in people is there – what’s missing is support. With the right policy framework, SMEs can unlock productivity and growth through better wellbeing investment.”

^{Unum internal data as at end of 2024. Figure represents the total number of lives under all policies and includes the total number of policies for an individual employee where they are insured under more than one product.}