Andrew Keates Accountants we are continuing our explanation of July’s Announcements George Osbourne and their effects on Liverpool’s Small businesses,
In July Chancellor declared a 50% raise to the national insurance employment allowance coming from £2, 000 to £3, 000, which will support small enterprises to decrease their wage bill and may even offset the elevated Living Wage charge.
The decrease to corporation tax may also aid in relieving the cost demand of the wage increases but a lot depends on the amount of low-paid employees a company has and its particular degree of profitability.
As outlined by accountancy firm BDO, the Employment Allowance is only going to allow business employers (who are paying minimum wage) to balance out the cost of the Living Wage increases approximately up toTwo Thousand hours. From then on, the company will be a net loser unless of course it is profitable enough to take advantage of the cut in the rate of corporation tax.
Many small company pundits were not impressed from the announcement.
Philip Salter, director of the Entrepreneurs Network, explained: “The Government should keep the decision of exactly what level to set any wage floors in the hands of the professionals at the Low Pay Commission, making sure that companies aren’t compelled to sack personnel if payroll costs climb an excessive amount.
“If the Chancellor wished to help the lower paid workers, he needs decrease Employers’ National Insurance, 70% of which is taken care of by the employees, as opposed to just raise the Employment Allowance from £2, 000 to £3, 000 per year. “
For more information from Liverpool Accountants Andrew Keates and how the employment cost changes will affect your business please call one of our advisor for no obligation chat today!