"With the overall tax burden rising to record levels, cuts to capital allowances, new NIC charges on salary-sacrifice pensions and intensified HMRC enforcement, small businesses now face even higher operating costs just as demand softens. As the government grapples with balancing fiscal responsibility and supporting economic growth, the Autumn Budget has now been delivered, marking an important moment for SMEs in the UK."
"The first is the decision to apply National Insurance to salary-sacrificed pension contributions. Many SMEs rely on these arrangements to improve overall reward packages without inflating headline salaries, and the removal of their NIC advantage raises employment costs at a time when margins are already thin. Employers now face the choice of absorbing the cost, reducing the generosity of schemes, or reshaping pay packages, none of which is straightforward when competition for talent remains tight."
The Chancellor increased reliance on taxation to stabilise public finances, pushing the overall tax burden to just over 38% of GDP within the forecast period. Personal taxation rises through frozen thresholds and National Insurance changes, reducing household disposable income and weakening demand. SMEs face higher operating and wage costs as employees seek to offset lower take-home pay. Key measures hitting smaller firms include applying National Insurance to salary-sacrifice pension contributions, raising employment costs, and cuts to capital allowances and corporation tax writing-down allowances, which increase the tax cost of investment. Intensified HMRC enforcement further raises compliance pressures for small businesses.
Read at London Business News | Londonlovesbusiness.com
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