HomeGrowth & TechEmployment allowance rise 'helps small firms do what they do best'

Employment allowance rise ‘helps small firms do what they do best’

Small firms across the UK are set to benefit from the £1,000 rise (from £4,000 to £5,000) to Employment Allowance – a development which means these businesses can claim up to £5,000 off their employer’s National Insurance Contributions (NICs) bills.

The change takes 50,000 firms out of paying NICs and the Health and Social Care Levy (SCL). In turn, this increases the total number of businesses not paying NICs and the SCL in the UK to 670,000.

This is the third time the government has increased the Employment Allowance since its introduction in 2014. Firms will be able to employ four full-time workers on the National Living Wage without paying employer NICs.

Small firms set to experience the benefits

As many as 94% of businesses benefitting from the £1,000 increase are small and micro businesses, and the sectors that will see the highest numbers of employers benefitting are:

  • The wholesale and retail space
  • The professional, scientific and technical activities industry
  • The construction industry

Martin McTague, National Chair of the Federation of Small Businesses, previously said: “We originally put forward the Employment Allowance as a targeted measure to help small firms, and it has now been expanded three times since its creation.

“Together with a cut to fuel duty, these measures will provide crucial breathing space for our embattled small employers.”

Helping small firms ‘do what they do best’

More recently, the FSB National Chair added: “The increase in the Employment Allowance helps small firms do what they do best, creating and sustaining jobs.

“This was FSB’s ‘hero ask’ at the Spring Statement, and we have hugely valued the time taken by Treasury officials to work with us on the positive impact this will have not just on work opportunities, but also training and investment.”

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