A further increase in Employment Allowance could help businesses cope with rising NICs
An increase in Employment Allowance could help businesses cope with the rise in National Insurance Contributions (NICs), say leading audit, tax and business advisory firm, Blick Rothenberg.
Mark Cunningham, a partner at the firm, said: “The government has hinted at potential relief measures to help businesses cope with the rise in NICs. A further rise in the Employment Allowance, which will go up from £5000 to £10,500 in April 2025, would be a welcome step that directly supports smaller businesses and those in the retail and hospitality sectors by offsetting a greater portion of their NIC liabilities.”
He added: “However, with limited time before the Spring Statement, businesses need clarity now on whether this and other reliefs will materialise. Some businesses are facing either passing on their additional NIC costs to customers or absorbing the burden by limiting wage growth or reducing hiring. Knowing NIC reliefs will be in place would reassure employers that they may not have to take those steps.”
Mark said: “But beyond short-term adjustments and reliefs, the Spring Statement must set out a clear and consistent approach to employer taxation and business policy. The recent pattern of frequent tax changes and uncertainty around future increases makes it difficult for businesses to plan effectively. Stability in tax policy would give businesses the confidence to invest, hire, and drive economic growth.”
He added: “A structured, long-term approach to taxation, rather than reactive changes, will create an environment where entrepreneurial businesses can thrive. The Spring Statement is an opportunity to provide this clarity, and it is essential that the Government delivers.”