Rishi Sunak flags tax cut for small businesses

Rishi Sunak flags tax cut for small businesses
Courtesy: Leon Neal / Staff | Getty Images News Via Getty Images

Nearly half a million UK businesses will benefit from a tax cut worth up to £1,000 from this week.

The Employment Allowance has risen from £4,000 to £5,000 – meaning smaller firms will be able to claim up to £5,000 off their employer National Insurance Contributions (NICs) bills. Announced by the Chancellor at last month’s Spring Statement to reduce employment costs, the change takes an extra 50,000 firms out of paying NICs and the Health and Social Care Levy. This increases the total number of businesses not paying NICs and the Levy to 670,000.

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UK Chancellor Rishi Sunak said: “This tax cut for half a million businesses will help them thrive and grow to help drive our economic recovery.

“It comes on top of a suite of wider tax cuts available to firms, including 50 per cent business rates relief, a record fuel duty cut and the super-deduction, the largest two-year business tax cut in our history.”

According to the minister, 94 per cent of businesses benefitting from the £1,000 increase are small and micro businesses, and the sectors that will see the highest numbers of employers benefitting are the wholesale and retail sector (87,000); the professional, scientific and technical activities industry (63,000); and the construction sector (52,000).

Michelle Ovens CBE, founder of Small Business Britain, said: “The Chancellor’s move to increase the employment allowance is welcome, and will certainty play a role in helping those businesses with employees deal with the huge cost-of-living challenges they are currently facing.

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“In particular, it is good to see the immediacy of this rise in employment allowance, which will go towards helping businesses asap.”

The Treasury department said UK businesses across the board are also benefitting from a freeze to the business rates multiplier, putting the brakes on bill increases and worth £4.6 billion over the next five years. And, landmark Help to Grow programmes are supporting small and medium enterprises (SMEs) to adopt productivity enhancing software and to get mini-MBAs.

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