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National Insurance Contribution Increase Set To Adversely Affect Small Business Tax Affairs

I’ll be honest; I was a little disappointed with the budget announcement toward the end of last month. Admittedly, there were a small number of measures being introduced that will benefit small businesses, but the Chancellor has not backed down from his November 2009 proposal to introduce a 1% increase to employer’s national insurance contributions (NIC).

Although 1% doesn’t sound like a lot, it certainly adds up when you look at the number of employees in a small business.

I’ve seen some talk about this equating to substantial job losses around the country as small businesses aren’t able to sustain the increase in employer’s NIC. Hopefully it won’t come to this but inevitably, it will have to be a decision as to whether the business can survive or not. Fingers crossed that it will only be a last resort for small businesses trying to make ends meet.

It doesn’t really seem like a lot of thought has gone into this proposal at a time of economic sluggishness following the recession. Many small businesses are still trying to get back on their feet. This will surely seem to some like a kick in the teeth. The positives of the budget announcement are that there is to be a small business rate relief and an extension to the Time To Pay scheme. Time To Pay is the scheme that allows businesses to defer their tax payments.

If you’ve found your business to be taking one step forward and two steps back and this new proposal looks like making it three steps back, get in contact with one of our advisors. There are options available for small businesses such as the government backed loans from publically owned Lloyds TSB and RSB banks. Our advisors will be able to talk through all the options available to you and your business.

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