Call for new Budget reaction from small businesses

Although we are a growing business, the cost burden of the rise in National Insurance and the change in the tax threshold will significantly impact our plans for hiring new staff. Unfortunately, Labour has completely ignored the threat of generative AI in their Budget, which is now what many businesses will use before hiring new staff, especially for lower-paid work such as admin-based roles. The lack of real business experience among the Labour cabinet and ministers means they are completely blind to how financially challenging it is to run a business, and how readily a business will turn to outsourcing and AI to remain profitable. It's not about greed; it's about survival. That's why ultimately, it is the working people of Britain who will pay the price for the tax rises.

The rise in National Insurance will be a significant challenge for us. In an industry known to have tight margins and intense competition, we're already under pressure to keep costs low while delivering high-quality service. Our clients, landlords, are already feeling the strain from rising interest rates, and increase in regulations, and now the increase in stamp duty, so it's difficult for us to pass on the extra costs. However, a positive is the increase will force us to work on making our service more efficient, leading to less hiring and more automation, which is where the world is going. Still, the question is, what does that do for the labour market in the UK, where people are already struggling to get work? Ultimately, the consumer always gets hit; in this case, the consumer is the employee.

The government’s decision to raise employer National Insurance Contributions adds yet another financial strain on small charities like ours, already facing immense pressure.
Demand for our services is surging, yet our resources are dwindling. For many small charities, this increase in employer NICs—without any exemption for the charity sector—will strain an already limited budget to breaking point.
Mounting costs and declining funding mean we have little flexibility to absorb this expense. In the months ahead, we may face difficult choices: reducing staff, adjusting salaries, or even scaling back essential services that vulnerable people rely on.
The impact of these cuts will be felt not only by us but also by the community we serve, especially those most in need. It is those who need our support most who stand to suffer from these unfortunate financial constraints.

Looking at National Insurance rises on a spreadsheet at a macro level to theoretically raise £20 billion fails to take into account the impact on 5.5 million small businesses, for whom this added increase will be an unbearable extra burden. National Insurance contributions are the UK's second-largest revenue stream behind income tax, but at an additional cost of £800 per employee on average will have employers rethinking hiring plans or raising prices and we then enter a wage spiral. Most certainly in the voluntary sector, this will lead to staff cuts due to the additional burden in operating costs that are rarely covered by grants.

Although it was widely speculated before the Budget, the National Insurance increase will definitely cause some small businesses to rethink their hiring plans. On top of that, Labour have admitted that wage growth could be impacted as businesses struggle - yet again - with the rising cost of employment.

Not sure if anyone really wins on this occasion...only time will tell what impact it has on the unemployment rate, moral, tourism and business growth. There is only so much businesses can be expected to contribute to this 'black hole'. Our prices will now increase further in 2025 to compensate for the loss expected with the NI increase. Recruitment is hard enough as it is in our location, it is only going to get tougher.
What with the Tourist Levy also looking likely to be implemented, every visitor to the area will suffer with more to pay and less to spend in the locality. A potential downward spiral. Ever the optimist, I am remaining positive that we can make this work because it has to...we have no option but to adapt for our business to survive.

I run a small coaching practice serving global and UK clients, I have one full-time member of staff and several associate coaches.

The 1.2% increase in employer's national insurance contributions on top of the increases in minimum wage will hurt small businesses. Especially those reliant on apprentices (trades, hairdressing and beauty, pet grooming and small businesses generally) where 40% of apprentices start from SMEs.

The effective increase for under-21s is 16-18% which may make apprentices unaffordable where SMEs already have small margins.

I thought the increase in the employment allowance from £5k to £10,5k would be a benefit...but I worked out to get the full benefit I'd have to pay me and my one employee £150k salary each (I turned over £240k last year for context) and the tax on that would be ridiculous.

There's no real benefit for small businesses with less than 5 employees. 75% have revenues less than £300k. Of those 80% have revenue LESS than the VAT threshold of £85k

We are a small business operating in a sector that is difficult to access for young people, and so we strive to reduce barriers and make our industry more accessible. Unfortunately, this is made more difficult by the prohibitive costs of hiring people as employees, and the rise in National Insurance along with lowering the payment threshold will make it even more expensive for businesses like us to employ people. We are already a Living Wage accredited company and so rises in minimum wage will not affect us, however, overall we feel that there has been little recognition of the enormous challenge and risk that working class people like ourselves have taken on to start a company and offer opportunities to others.