Small businesses to benefit from increase in employment allowance
Following the announcement from Rishi Sunak at the Spring Statement, the Employment Allowance has increased from £4,000 to £5,000, meaning that smaller businesses will be able to claim up to £5,000 off their employer National Insurance Contributions (NICs) bills. Announced last month by the Chancellor, the change takes an extra 50,000 firms out of paying NICs and the Health and Social Care Levy – increasing the total number of businesses not paying NICs and the Levy to 670,000. Luke Davis, CEO of IW Capital, a leading private equity house who provide investment for small businesses said that this tax cut is a welcome introduction and helps SMEs do what they do best – creating and sustaining jobs whilst driving the UK’s economy.
After a promising start to the year, 40% of UK small and medium sized businesses are planning to hire, on average, six new employees before the end of March as they look to continue to grow and progress their company. The tax cut is seen as the newest move from the Government to aid small businesses as the Chancellor said the cut was intended to ‘help SMEs thrive and grow to help drive our economic recovery’.
One of the most impressive facets to the UK’s private sector is its dynamic small business landscape. SMEs throughout the UK saw impressive growth throughout 2021 and have continued this momentum into 2022 with 56.2% reporting a rise in earnings in the last quarter of 2021 versus the same period of 2020. The small business eco-system is predicted to be a ‘boom’ sector throughout 2022 for UK business with small businesses looking to drive employment and investment numbers with 58% predicting an increase in revenue this quarter compared to last year.
The rise in the employment allowance offers a bit of breathing space for small businesses. With several major factors currently affecting the business environment, this will help ease some pressure on UK SMEs and should allow them to continue to grow and progress. Small businesses have worked so hard throughout the last year, not just to survive but to prosper and with restrictions ending the small business sector looks set to revel in the opportunity to grow their operations significantly throughout 2022.
SMEs are set to drive employment and investing throughout 2022 – with nearly half of UK SMEs looking to hire new employees after a promising start to 2022 and UK investors ready to back start-ups and newly formed businesses SMEs are ready to make 2022 an impressive year and grow as much as possible throughout the year.