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SME’S welcome employment allowance increase as 2 in 5 plan to increase salaries in 2022


Today the Chancellor announced in his Spring budget plan an increase in the employment allowance relief to help small businesses navigate through the cost of living crisis.

Global supply chain disruption, staff shortages, the economic response to Putin’s invasion of Ukraine and the Covid pandemic has led to significant increases in the cost of fuel and energy resulting in many small business owners feeling the financial strain of the UK’s cost of living crisis. 

Small business owners across the UK will welcome today’s announcement of the £1,000 increase in the employment allowance as small business owners also continue to face negative financial implications caused by the ongoing staffing crisis.

Takepayments surveyed small business owners across the nation to uncover how the staffing crisis was affecting business owners and the findings reveal over two fifths of business owners say they have experienced staff shortages this year.

The staff shortages are having a devastating effect on small businesses, in fact, one in four SME owners claim they have had to delay their business growth plans because their business lacks the number of staff it needs to operate at its current capacity.

As a way to fill vacancies and attract workers, one fifth of small business owners state they had to increase the salaries for open job vacancies in 2021 in a bed to fend of competitors, while a further two fifths of business owners plan to do so over the course of 2022.

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Small businesses within the food and drink sector have seen the biggest increase in salaries with 15% increasing their wages by a staggering 50-100%.

To cover the financial strain due to the staff shortages, one in four (24%) business owners admitted they have already raised prices for consumers and one in five expect to do this in the next 3 months (19%).

Back in December at the height of the supply chain and staff shortages crisis small business owners called on the government for financial support into 2022 to help combat the ongoing issues as two fifths of those surveyed said if the staff shortages and supply issues were set to continue into 2022 then there is a strong chance their business wouldn’t survive.

When asked what support small business owners would like to see from the government to help them financially navigate through the supply chain issues and staff shortages, a tax break specifically for small business owners came out on top (41%).This was followed by the government providing paid training programs (26%) as well as specific SME support packages (25%) until the supply chain and staffing issues return back to a manageable condition.

The employment allowance allows eligible employers to reduce their annual National Insurance liability by up to £4,000, but this will now increase to £5,000 from April 2022. 

This means eligible businesses and charities will be able to claim a greater reduction on their secondary Class 1 National Insurance liabilities and, from the 2023 to 2024 tax year onwards,their Health and Social Care Levy liabilities.

The increase from £4,000 to £5,000 will bring some financial ease from these salary increases however as inflation continues to rise and the cost of living crisis in the UK remains, small business owners are bracing for a difficult few years ahead as consumers continue to feel the financial pinch.

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