SMALL businesses will benefit from some changes announced by the Chancellor last week, but more needed to be done to address the rising cost of living.
In last week’s Spring Statement, the chancellor announced that National Insurance will kick in from £12,570, an increase of £3,000.
David Hedges, Partner and Head of Employment Taxes at Azets, a regional accountancy and business advisors to SMEs and Top 10 accountancy firm, said that it will help employees.
And the Employment Allowance for employers will rise by £1,000 to £5,000.
“The eligibility for Employment Allowance is where an employer’s NIC liability is less than £100,000 in the previous tax year.
“This will be a helpful easement for small employers which goes some way to mitigate the fact that there is no change in the Employer National Insurance threshold and which the Chancellor estimated will benefit around half a million SMEs.”
He said that Azets welcomed planned discussions on reliefs such as training, qualifications and R&D tax credits, but for SMEs, these measures would be unlikely to fully mitigate the inflationary impact of the Health and Social Care levy from April.
“This means there will be more pressure on SMEs from their employees to increase wages to offset the effects of increased inflation – which is predicted to rise to 8% this year – in order to retain valued staff,” he said.
“The tax cuts outlined for 2024 are welcome, but SME employees are struggling with steeply rising living costs now.
“We would urge the Chancellor to go further in his support particularly for the SME community.”
He said that this could include help with working from home arrangements.
“This is proving attractive to many employees who would like to combine their personal and business lives more effectively, while employers may be able to reduce overhead costs,” Mr Hedges said.
“Some encouragement to accelerate this would have sent a positive message to employer and employee alike.”
