The new government employment allowance initiative was first trailed by George Osborne in the autumn statement, and was confirmed in the budget in March.
The new allowance reduces the burden on SME by offering a £2,000 contribution towards national insurance contributions. The government is now encouraging start-ups and small and medium sized businesses to take advantage of the new tax break and to use this money to expand. If the figures in the recent survey by insurer, Direct Line for Business, are correct, it would appear that many businesses are already making the most of the initiative.
According to the survey, one-in-five SME owners have revealed they will be looking to grow following the Chancellor’s decision to introduce the employment allowance. What’s more 1 in 3 of the SME owners surveyed confirmed they were looking to increase their workforce due to the reduced cost of employment.
Jazz Gakhal, head of Direct Line for Business, commented on the results saying:
“It is encouraging to see that so many UK businesses are looking to expand. The government’s decision to reduce the financial burden for small companies is a welcome boost for owners and managers across the country.”
“Given small and medium-sized enterprises account for over 99% of all private sector businesses in the UK, the health of this sector is vitally important. For the person who has set up their own business, and is thinking about taking on their first employee, a huge barrier will be removed,” he said.
Helen Dickinson, director general of British Retail Consortium (BRC), also broadly welcomed the initiative, but expressed some concerns that the new allowance offered little encouragement to larger, more-established businesses:
“We called for a time-limited national insurance holiday, as an easy way to encourage businesses to take on young unemployed people. Existing incentives are cumbersome and not being taken up.”
“The employment allowance will help many small businesses with the cost of taking on staff. But it won’t incentivise larger businesses, which also have a vital role in creating jobs.”
Could your business benefit from the new employment allowance?
If you would like clarification on the matter or would like to discuss any other issues relating to small business tax and insurance advice or growing your small business, then give Steven Glicher accountants a ring on 0161 485 8007