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<\/figure>\n<\/div>\n\n\nThe UK\u2019s business landscape is made up of 5.7 million enterprises<\/a>, within which there are over 1.1 million micro-businesses (that is, businesses employing fewer than 10 staff).<\/p>\n\n\n\n Throw sole traders into the barrel as well, though, and that figure\u2019s over 5.4 million…<\/p>\n\n\n\n It’s clear that micro-businesses (or micro-enterprises) make up a huge slice of the UK\u2019s business population. They play a vital role in the economy and in people\u2019s daily lives.<\/p>\n\n\n\n It\u2019s worth getting under the skin of what makes a business a micro-business in the UK. Given a closer look, they reveal some interesting trends.<\/p>\n\n\n\n Just started a business? Don\u2019t forget about your insurance. Take a look at how we can support you with guidance and advice on what you may need<\/a>.<\/em><\/p>\n\n\n\n <\/p>\n\n\n\n Let\u2019s start by defining exactly what a micro-business is. According to HMRC<\/a>, for a business to be registered with Companies House as a \u2018micro-entity\u2019 (their official term for a micro-business or micro-enterprise), it must meet at least two of the following criteria:<\/p>\n\n\n\n Obviously, HMRC has to draw a firm line between micro-businesses and small businesses for tax and accounting purposes. So its definition of a micro-business is bound to be prescriptive.<\/p>\n\n\n\n However, micro-business definitions can and do vary. Citizens Advice, for example, set the maximum turnover for a micro-business at \u00a32 million<\/a>.<\/p>\n\n\n\n Energy companies have their own criteria<\/a>, too, set by Ofgem<\/a>. To qualify as a micro-business, you can\u2019t use more than: 100,000 kilowatt hours (kWh) of electricity and 293,000 kWh of gas per year.<\/p>\n\n\n\n Some stats reports will also treat sole traders as separate entities while others include them in small business or micro-business categories. (The best, of course, will show you both.)<\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n At the start of 2026, the UK\u2019s total business population was 5.7 million<\/a>. Of those, 5.64 million were small (0-49 employees), 38,435 were medium-sized (50-249 employees), and 8,335 were large businesses (250+ employees).<\/p>\n\n\n\n According to those stats, small businesses (including micro-businesses) make up 99.17% of all UK businesses.<\/p>\n\n\n\n However, separate ‘micro’ from ‘small’ and it becomes clear that micro-businesses outnumber larger small businesses by a wide margin. Then, the UK has around 1.15 million micro-businesses and only 220,000 small businesses.<\/p>\n\n\n\n Throw sole traders (AKA \u2018non-employing businesses\u2019) into the mix and things get even more interesting. As there are over 4.27 million sole traders in the UK, this puts the total number of micro-businesses at over 5.4 million.<\/p>\n\n\n\n <\/p>\n\n\n\n There\u2019s a temptation to think of micro-businesses and small businesses as being little and the same. Especially when you see them grouped together with small businesses in stats reports. Or even SMEs (small-to-medium enterprises).<\/p>\n\n\n\n Beyond the headline stats, though, there are some crucial differences between micro-businesses and small businesses which may influence how they operate and the kind of resources and support they need.<\/p>\n\n\n\n <\/p>\n\n\n\n To prevent confusion between larger small businesses and micro-businesses, it\u2019s worth referring back to HMRC<\/a>. By their reckoning, for a business to be classified as a \u2018small business\u2019, they must have at least two of the following:<\/p>\n\n\n\n Clearly, \u2018small’ businesses aren\u2019t all that small. Especially when compared with micro-businesses…a property law firm, for example, might employ only four staff members yet generate enough revenue to be registered as a small business.<\/p>\n\n\n\n In the same way, an up-and-coming pasta box subscription start-up can\u2019t call itself a small business simply because it employs more than 10 people. As far as HMRC\u2019s concerned, it\u2019s a micro-business until it turns over \u00a31 million or <\/em>has assets on its balance sheet worth over \u00a37.5 million.<\/p>\n\n\n\n <\/p>\n\n\n\n Ultimately, the differences between larger small businesses and micro-businesses stretch beyond company size, turnover, and assets.<\/p>\n\n\n\n They play very different roles in the UK\u2019s business landscape. Both in terms of structure and in the services they offer.<\/p>\n\n\n\n When it comes to different types of businesses, there\u2019s plenty of variation within the micro-business community. Especially if you count freelancers, sole traders, and side hustlers within that demographic as well.<\/p>\n\n\n\n For example, a micro-business could be a marketing consultant who\u2019s left their firm to go it alone. Or a caf\u00e9 that employs eight members of staff.<\/p>\n\n\n\n <\/p>\n\n\n\n According to most stats reports, an SME (small-to-medium enterprise) can have anywhere between 1-249 employees. Which technically means all micro-businesses are SMEs too.<\/p>\n\n\n\n SMEs are a broad but important category when examining the UK\u2019s business landscape. The stats speak for themselves: 99.9%<\/a> of all UK businesses are SMEs. They generate 51.2% (\u00a32.8 trillion) of the UK\u2019s total business turnover and account for 60% of its employment.<\/p>\n\n\n\n <\/p>\n\n\n\n First, let\u2019s look at the average turnover for a business of any<\/em> size in the UK. In 2025, the average UK business earned \u00a3970,897<\/a>. The turnover was 75% higher in London, at \u00a31.7 million.<\/p>\n\n\n\n Per worker, this works out to an average turnover of \u00a3196,411. Or \u00a3296,000 for those working in London.<\/p>\n\n\n\n However, the total turnover of all<\/em> UK businesses was \u00a35.5 trillion. Small businesses contributed 14% to that pot, micro-businesses 12.7%, and sole traders 7.3%.<\/p>\n\n\n\n The biggest contributors were large businesses, representing just 0.15% of businesses<\/a> but generating 48.8% of the UK’s business turnover.<\/p>\n\n\n\n <\/p>\n\n\n\n It’s worth noting that, in terms of numbers, micro-businesses that employ staff have declined slightly since their peak. In 2022, there were 1.19 million. This has slightly dropped to 1.15 million.<\/a><\/p>\n\n\n\n Nobody knows exactly what’s in store for the UK’s micro-businesses. But when micro-business owners were asked what their expectations for the following year were, over half (53.6%) expected their turnover to stay the same. Meanwhile, 15% expected it to increase and 15.5% to decrease. <\/p>\n\n\n\n This is a slightly worse outlook than our last update in 2024, where over 17% of micro-business owners expected their turnover to increase. But, this could be due to economic impacts, such as cost of living rises and the increase in employer national insurance contributions<\/a>.<\/p>\n\n\n\n <\/p>\n\n\n\n We’re here to protect micro-businesses from all manners of risks and are happy to offer our advice. If you’re not sure how to go about insuring your micro-business, you can have a read through our guide to the different types of insurance small businesses need<\/a>.<\/p>\n\n\n\n We\u2019ve also produced a bunch of other resources for micro-businesses, like our guide on hiring your first employee<\/a>.<\/p>\n\n\n\n Otherwise, give us a call on 0345 222 5391<\/strong> and one of our friendly advisers will help you out.<\/p>\n\n\n\n Image used under license from Shutterstock.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" The UK\u2019s business landscape is made up of 5.7 million enterprises, within which there are over 1.1 million micro-businesses (that is, businesses employing fewer than 10 staff). Throw sole traders into the barrel as well, though, and that figure\u2019s over … Continue reading What is a micro-business?<\/h2>\n\n\n\n
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The UK’s micro-business landscape at a glance<\/h2>\n\n\n\n
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How many micro-businesses are there in the UK?<\/h2>\n\n\n\n
Small difference?<\/h2>\n\n\n\n
What’s the difference between a small business and micro-business?<\/h2>\n\n\n\n
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Are sole traders and freelancers classed as micro-businesses?<\/h2>\n\n\n\n
What about SMEs?<\/h2>\n\n\n\n
What’s the average turnover for a UK micro-business ?<\/h2>\n\n\n\n
Growth and trends in UK businesses<\/h2>\n\n\n\n
Taking care of (micro)business<\/h2>\n\n\n\n