Sunak to offer small firms boost with cut in ‘jobs tax’
Chancellor Rishi Sunak is expected to offer a big tax break for small firms by announcing a cut in employers’ national insurance payments.
All firms will not have to pay Contributions – known as the ‘jobs tax’ – on the first £4,000 of their annual bill by raising the employment allowance by £1,000.
It was promised in the Tory manifesto and will help firms cope with the rise in the minimum wage by 50p to £8.72 and to £10.50 by 2025.
It was initially intended that firms employing four people on the minimum wage would pay no National Insurance at all on the first £2,000 of their bill.
This was increased to £3,000 in 2016 when the National Living Wage was introduced. The Sun reports that the employment allowance threshold will be raised as promised from next month.
The Federation of Small Businesses said the latest move will give a much-needed reprieve to Britain’s army of 4.5 million small firms.
FSB boss Mike Cherry said: “Delivery of a manifesto commitment to increase the employment allowance to £4,000 from next month is very welcome.
“Small employers will be hugely grateful for this intervention, particularly with an inflation-busting 6% increase in the national living wage taking effect in April.
“With businesses disrupted by coronavirus, this measure should now be followed up with the immediate re-introduction of a statutory sick pay rebate for small firms.
“Without one, we’ll likely see businesses going to the wall over the weeks ahead.”