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HOW TO HANDLE THE NATIONAL INSURANCE HIKE WITHOUT BREAKING THE BANK
A new tax year has begun in the UK and SMEs are facing challenges with regards to the rise in Employer National Insurance Contributions. It is affecting hiring and payrises for employees. Amy Hancock, Owner of accountancy practice, Hancock & Hastings, explores what SMEs can do to handle this rise in bills.
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WITHOUT CAREFUL CONSIDERATION, THESE CHANGES COULD DERAIL EVEN THE BEST LAID FINANCIAL PLANS.
S THE NEW tax year begins
A and legislative changes are introduced, small business leaders are faced with a whole host of new challenges. Effective immediately, employer National Insurance Contributions( NIC) are rising from 13.8 % to 15 %, whilst the threshold at which employers start paying NICs on employee earnings drops from £ 9,100 to £ 5,000.
On top of that, the National Minimum and Living Wage is increasing, adding even more pressure to wage bills. This brings extra costs that businesses can’ t ignore.
Without careful consideration, these changes could derail even the best laid financial plans. However, it isn’ t doom and gloom. Whilst conventional wisdom says small businesses should be battening down the hatches, the latest data paints a different story. Small businesses aren’ t just surviving; they’ re thriving and hiring. In fact, 54 % of UK entrepreneurs plan to hire in 2025, defying expectations and doubling down on growth. The Intuit QuickBooks Small Business Index also shows that small businesses added 6,000 new jobs in February and March. can help SMEs adapt, thrive and protect their bottom line.
1. Claim the Higher Employment Allowance
Amid what appears to be a barrage of bad news, there is one silver lining – the Employment Allowance is increasing from £ 5,000 to £ 10,500.
This allowance effectively reduces your employer NIC bill, allowing all eligible employers to lower their annual NICs by up to £ 10,500, regardless of previous liabilities.
This increase can significantly offset the additional NIC cost you’ ll be facing. If your NIC bill is under £ 100,000, make sure you’ re claiming it. It’ s simple to apply via HMRC’ s payroll system, and it’ s one of the easiest ways to manage the hike.
Furthermore, from April the UK Government has also removed the £ 100,000 eligibility
This isn’ t just about surviving; it’ s about building smarter. For small businesses looking to grow despite rising costs, there are several low cost, practical strategies that
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