April Foster.
Post-Budget survey reveals owners face a NIC dilemma
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Published in association with
44% of UK SMEs say the increase in employer National Insurance Contributions in the Autumn Budget will negatively impact them, the new Owner Managed Business Survey by leading accountancy network Moore shows.
The survey also finds that more than a third (37%) of businesses now cite tax as one of the biggest challenges facing them in the next three months compared to 21% 12 months ago.
Tax is now the second biggest concern of owner-managed businesses – just behind costs such as energy and property (38%).
The National Insurance increase is estimated to cost businesses an additional £25 billion a year.
April Foster, managing partner at Moore East Midlands, said: “Tax increases in the Budget went further than many business owners expected. Many now worry that their businesses will suffer as a result.
“Business owners will have to decide whether they pay for the National Insurance increase by reduced profits, cost cutting or by putting up their prices. None of those solutions are very palatable.”
The survey confirms the view of owner-managers that the increase in employer NICs puts too much of the tax burden on their businesses, she added. “Our research shows that the perceived burden of taxes has become a much bigger worry following the Budget.”
According to Moore’s survey, 29% of owner-managers say that tax rises in the Budget will make it harder for their businesses to commit to capital expenditure. 29% also say that the Budget will make hiring new employees harder.
“Tax rises on businesses come with a cost,” said April. ”An entrepreneur who is concerned about their business’ tax bills will not be confident about investing or growing their workforce.
“Owner-managed businesses are major employers in the UK – a Budget that impacts their recruitment affects the whole job market.”
Moore’s survey shows that business owners are perhaps surprisingly positive about the recent Employment Rights Bill. It found that 49% of owner-managed businesses surveyed welcome the Bill, compared to 24% that view the Bill as a negative. The Bill includes measures to ban zero-hours contracts and give employees ‘day one’ rights to protection from unfair dismissal.
“Business owners actually welcome many of the measures in the new Employment Rights Bill,” said April. ”We find that business owners are keen to be good employers and treat their employees well and that lines up with the positive views on the Employment Rights Bill.”
Moore’s survey also shows that a majority of owner-managed businesses (58%) are confident that trade with the EU will become easier over the next 12 months. This sentiment may reflect recent efforts to streamline post-Brexit trade regulations.
“Confidence in the future of UK-EU trade is one of the most encouraging results of our survey,” said April. ”A lot of owner-managed businesses are big exporters and would welcome improved trade relations with the EU.
“Delivering those improved trade ties is a key government objective for the coming year and beyond.”
- 520 directors of UK businesses with an annual turnover between £1 million and £30 million participated in Moore UK’s December 2024 Owner Managed Business Survey.
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