You probably won’t need an accountant in Devon or Somerset from our own team at TS Partners to tell you that these are pressured times for ‘UK plc’ – indeed, your firm is likely to have had plenty of direct experience of precisely that.
Many UK businesses, then, will probably have at least welcomed the increase in Employment Allowance that took effect on 6th April. The change – which HM Treasury has described as a “tax cut worth up to £1,000” – will allow smaller firms to claim as much as £5,000 off their bills for employer National Insurance Contributions (NICs), up from the previous £4,000.
The Government said that this change alone, which was announced by Chancellor of the Exchequer Rishi Sunak at the recent Spring Statement, would benefit almost half a million businesses in the UK. However, support measures like this one have done little to alter the reality of serious struggles for great numbers of UK firms so far during 2022.
Who most stands to benefit from the increase in Employment Allowance?
According to the Treasury, the rise in Employment Allowance from £4,000 to £5,000 will benefit about 495,000 businesses – the equivalent of around 30% of all firms in the UK. It means that the total number of UK businesses not paying the Health and Social Care Levy is now 670,000.
The Government added that 94% of businesses benefitting from the £1,000 rise were small and micro businesses.
With regard to the specific sectors that will apparently see the highest numbers of employers benefitting, HM Treasury ranked the wholesale and retail sector first, with 87,000 firms, followed by 63,000 businesses in the professional, scientific and technical activities industry, and the construction sector, with some 52,000 employers.
But UK businesses are continuing to navigate major – and sometimes existential – challenges
Among those to voice their approval of the change to Employment Allowance was Martin Tague, National Chair of the Federation of Small Businesses (FSB), who said that it would help small businesses in the UK to “do what they do best, creating and sustaining jobs.”
However, there are other areas of Government policy in response to the current choppy economic waters – and the associated cost-of-living crisis – that have caused much greater consternation among business owners.
One of those is a £6 billion increase in employers’ National Insurance that also came into force on 6th April, and which the managing director of a chemicals manufacturer cited by the BBC said would add £90,000 to their payroll of 250 people. This, they said, was equivalent to the salaries of three graduate chemists.
The quoted individual added: “It’s another kick in the teeth at a time when everything is going up. We use nickel as a catalyser – that’s tripled. Plastics, transport, you name it. The sheer volume of price increases is incredible and we can’t pass it all on as my customers – and my customers’ customers – can’t afford it.”
The BBC story also referred to the number of company insolvencies in February being 23% higher than the same month the previous year, county court judgments (CCJs) against businesses – an early indicator of financial distress – having doubled.
Much concern has centred on such costs escalating at the same time as many COVID support measures have been withdrawn. In the words of a quoted partner at one insolvency firm: “Businesses that have bravely battled through the pandemic could now start to fail as the pressures they face become too much.”
Talk to the TS Partners team about the difference our accounting knowhow could make
The current times are unquestionably greatly testing ones for many UK firms – even those in relatively favourable circumstances. And whatever the circumstances and needs of your own business in South West England may be, you might greatly appreciate what an accountant in Devon or Somerset could do to help lighten your organisation’s load and support its growth.
Simply contact our team today, and we will be pleased to discuss with you the accounting services of ours that could most help your firm to better manage its finances.
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