“Budget is not all bad for SMES”, says Whiteley business adviser

The Chancellor announced that the national minimum wage for 18-20-year-old workers will increase 16.3% from £8.60 to £10 an hour, and the national living wage for workers aged 21 and older will increase 6.7% from £11.44 to £12.21 from April 2025.

This has led to speculation that these increases will lead to job losses.

However, Colin Bielckus believes that this might not have as much of a negative impact as people may think.

The Chancellor has also increased the employer’s allowance exempting 865,000 smaller employers from paying any NIC at all next year.

This will allow a small business to employ the equivalent of four full time workers on the national living wage without paying any National Insurance.

Colin believes this could provide relief and potentially offset the increases in wages - good news for small businesses.

Colin said: “Companies will either raise their prices or absorb the rise in costs themselves, which could affect profitability. It’s no secret that the cost of most things has risen significantly over the last few years, so increasing the amount that workers are paid is the right decision in my opinion, but it will obviously have an effect on the employers.

“Bringing in the increases in employer’s allowance for small businesses is a good way to offset this and it makes me optimistic that any changes that have come from the budget won’t negatively affect businesses.”

The Chancellor increased employer’s National Insurance Contributions by 1.2%, bringing it up to 15%.

She also plans to reduce the secondary threshold – the level at which employers start paying National Insurance on each employee’s salary – from £9,100 a year to £5,000.

Colin believes that the increase in employer’s allowance will help to “cushion the blow” from this.

These rises are projected to £25bn per year by the end of the forecast.

Colin said: “I think part of the issue is that the ‘black hole’ that the current Government inherited turned out to be much deeper than anticipated, so difficult decisions have had to have been made. I believe that this will have more of a positive impact than a negative one, so we have to remain optimistic about the future of small businesses.”