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All the best,
The SK Accountants team
First announced by the Chancellor in the Spring Statement, a tax cut worth up to £1,000 for eligible small businesses came into effect on 6 April.
The cut is set to benefit nearly half a million businesses in the UK as the Employment Allowance now allows eligible employers to reduce their annual National Insurance liability by up to £5,000.
So, what does this mean for you and your business?
Employment Allowance
Due to the increase, smaller companies will be able to claim up to £5,000 off their employer National Insurance Contributions (NICs).
This applies if the NICs bills were £100,000 or less in the previous tax year.
In a bid to reduce employment costs, the change allows an additional 50,000 businesses to get out of paying NICs and the Health and Social Care Levy.
As a result, the total number of businesses not paying NICs and the Levy will rise to 670,000.
They will also be able to employ four full-time employees on the National Living Wage without paying any employer NICs whatsoever.
The Chancellor, Rishi Sunak, commented on the changes:
“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% business rates relief, a record fuel duty cut and the super-deduction, the largest two-year business tax cut in our history.”
Who will benefit?
Small and micro businesses make up 94 per cent of those benefitting from the £1,000 increase.
The sectors that will feel the most positive impact are:
The increased allowance will be available through payroll software where this has been updated, or through a payroll adjustment.
Check if you are eligible to claim for Employment Allowance here.
For help and advice on related matters please contact our expert team.
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