The budget announcement of October 30th…there’s no way to play it down, the bulk of Labour’s plans for revenue raising will be at the expense of the business owner.
The Budget Breakdown for Business Owners
Employer National Insurance Contributions increase from 13.8% to 15%
A reduction in the amount at which the employer has to start paying National Insurance on each employee, from £9,100 to £5,000.
6.7% rise in the national living wage to £12.21 per hour – expected to increase the income of 3 million workers.
Together this is expected to raise £25 billion annually, but will put huge strain on businesses as they face considerably higher outgoings for retaining a workforce.
What’s been said…
Shevaun Haviland, Director General of the British Chambers of Commerce said, “while some protection for smaller firms is welcome, the increase in employer National Insurance Contributions will place a further cost burden on business. This, coupled with a 6.7% increase in the National Living Wage, means many firms will find it more challenging to invest and recruit in the short-term”.
Businesses of all sizes have warned that the hike in payroll costs will have to be found by either lower pay, or a reduction in the number of employees.
Labour claims that “today’s pain will be felt in improved public services, (and) a healthier and better paid workforce.”
If businesses are expected to take this new financial blow, Shevaun Haviland reiterates that “it’s crucial that we now see decisive and inclusive action at pace from the Government to unlock the investment the economy sorely needs.”
Is it all bad?
Is there any silver lining for businesses? Well, the employment allowance that allows some businesses to reduce their National Insurance Contributions has been raised from £5,000 to £10,500. But this is expected to only aid around 1 million small businesses. There has also been a freeze on fuel duty to aid transportation and logistics costs, and a freeze on Corporation tax. More of a beige lining, than a silver one!
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