Small businesses, many of whom are still recovering from the effects of the pandemic, were hit hard by Rachel Reeves this afternoon
An increase in employment allowance was welcomed by business owners, but changes to minimum wage and employer national insurance contributions will increase costs for SME ownersFirms were given a promising start after Rachel Reeves announced an increase to the employment allowance, rising from £5,000 to £10,500 – a Government scheme that helps eligible businesses reduce their national insurance contributions.
For 18 to 20-year-olds, the minimum wage will go from £8.60 to £10. Meanwhile, apprentice wages will rise from £6.40 to £7.55 per hour.: “Not only will this increase my costs drastically, but many 18-year-olds come into work with zero experience and then its up to us to train them, which comes at a cost.
Sanjay Aggarwal, founder of family-run spice company Spice Kitchen added that due to the minimum wage increase, his costs will rise by £5,000 a year.that although his costs are going to rise, he does not discourage the increase in national minimum wage and employer national insurance contributions. It’s been a tough few years for businesses, particularly those in the hospitality sector who are still recovering from the effect of the pandemic.
“These additional employment liabilities will undoubtedly result in operational reductions to right size financial performance or a further increase in the costs of products or services as costs are passed on which in turn affects growth plans.”Laura Suter, director of personal finance at AJ Bell, said: “It’s a Budget to batter businesses, with big hikes to payroll costs coming from national insurance increases and a higher minimum wage.
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