Lancashire based group calls for tax relief to support small businesses
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The UK’s largest business group is urging the Tories to help small employers with spiralling overheads one month before the planned £18bn collective annual increase in dividend taxation and NICs for employers, employees and sole traders takes effect.
The FSB is recommending an increase to the targeted Employment Allowance – which entitles small employers to a discount on their NICs bills – to £5,000 to free up funds for investment and expansion. The group estimates that the intervention would cost less than £500m, or under 3 per cent, of the forecast tax take from the combined hikes.
Analysis from the FSB shows that the planned 1.25 percentage point increase in employer NICs this April will add more than £3,000 to the annual tax bill of the average SME employer, already hard-pressed wiht recovering from the impact of the pandemic and spiralling fuel and transport costs.
On 1 April, the National Living Wage will increase to £9.50 for those over the age of 23. At the same time, business rates discounts for high street firms in England will drop in value and a lower rate of VAT for hospitality businesses will no longer apply.
FSB National Chair Mike Cherry said: “The Government’s levelling up plans are now at serious risk. The chilling impact of National Insurance hikes will hit the pay of those in regions that need help the most.“Slamming small firms with a jobs tax hike will put the brakes on investment, upskilling and growth within communities most affected by the pandemic."