One of the greatest challenges facing small businesses in today’s economy is a high operating cost. Business rates, utilities and national insurance bills all add up to a high price over the course of a year – a price which, at a time of uncertain consumer demand, can all too often cripple SMEs in local communities.
Fortunately, up to 1.25 million small businesses and charities are set to benefit from a cut in annual National Insurance Contributions which could potentially see them save up to £2,000 a year. The National Insurance Contributions Bill was officially passed by Parliament earlier this week and will come into force in April 2014.
Under the new laws, 450,000 of the country’s smallest businesses will no longer have to pay National Insurance Contributions at all, meaning they can channel a higher volume of revenues into expansion and product growth. They will also be able to allocate a larger budget for employee wages, meaning employment rates could be greatly improved in certain sectors.
The Association of Convenience Stores (ACS) welcomed the news, especially as their members and other small businesses will now be able to employ four adults, or ten 18-20 year olds, on a full time basis without having to worry about paying employer National Insurance Contributions. This, it believes, will greatly assist the growing issue of youth unemployment in small communities.
Chief Executive James Lowman says; “The Employment Allowance will provide direct help to local retailers, helping them to take on new staff.
“Local stores already create around 375,000 jobs, and increasing wage costs put pressure on retailers’ ability to employ more people.”
As more than 90 per cent of the Employment Allowance will go to businesses which employ fewer than 50 staff members, local stores will be the major beneficiaries of the Bill. With supermarkets in recent years providing a high level of competition and often pricing small businesses out of town centres, this could be just the boost SME retailers need to wrest custom back from larger rivals.
Do you think small businesses will take the opportunity to hire greater workforces under this new law, or will this make little impact upon employment in the retail sector?
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