In her recent budget, Chancellor Rachel Reeves announced that employer National Insurance contributions will rise from 13.8% to 15% in April. Meanwhile, the secondary threshold will drop from £9,100 to £5,000 meaning you will pay an extra £615 for each employee earning over £9,100.
13.8% to 15% — it sounds like a tiny rise, right?
But for some organisations, this will hit hard, it is an 8.7% increase.
Take the South West London Law Centres. According to press reports, the change will cost them £33,000, a sum the charity says it will struggle to find. Its chair, Allan Blake, has begged the government to exempt charities from the new regulations.
Meanwhile, 79 retailers — including Tesco, Boots, Marks & Spencer and Next — have written to Rachel Reeves to warn that the tax hike will result in job cuts or pay cuts.
Now, before we go any further, let me emphasise: this is not a political newsletter. I’m expressing no opinion on whether this change is good or bad.
But let me ask: when you heard about the increase, what did you do?
Did you get momentarily annoyed about the rise in expenses and then move on to something else? Or did you sit down with your accountant and work out, in pounds and pence, what this will cost your business next year?
If you’re committed to running your business responsibly, it’s vital to understand the practical, bottom-line impact of changes like these. Only then can you make informed decisions about how to respond.
Some businesses will be able to absorb the costs with little difficulty, but employers with mainly low salaried employees will be hit hard. For others, this might mean shrinking profits — or even moving into loss territory.
If that’s the case, what’s your plan? Will you reduce headcount? Increase prices? Move roles offshore? Delay hiring new people?
These are real options you may need to consider. And the sooner you start planning, the more prepared you’ll be when the new tax rates come into force.
More broadly, changes like these underline the importance of proper financial forecasting and planning.
When your business grows to £1 million or more, running your company on gut instinct or vague understandings is no longer enough. To navigate the challenges ahead, you need hard data — actual figures — to inform your decisions and help you maintain control of your finances.
That’s where we come in.
At Insight Associates, our outsourced financial management service is designed to help businesses like yours plan for the future with clarity and confidence. We ensure you have accurate, timely figures; use them to forecast your cash flow and create useful budgets; and work closely with you to ensure you understand your financial situation, and can use the numbers we give you to make well-informed decisions about the future of your business.
Let’s take the guesswork out of your financial planning.
Get in touch today to learn how we can help you navigate these changes—and any others that come your way. Simply email garry@insightassociates.co.uk or call our office on 01279 647 447 to arrange a no-obligation consultation.
Warmly,
Garry
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