UK SMEs eye £4bn NI savings despite looming tax hike

Small and medium enterprises (SMES) are preparing for a significant increase in national insurance contributions (NI) after the autumn budget last year, as Chancellor Rachel Reeves announced the rise of NI rates for the employer and the threshold of less than 2025/26.

Although the Treasury expects to collect 25 billion pounds annually to help communicate public financial resources deficit, fears are increasing that many smaller companies will struggle with the additional cost – which may be curbing from employment, wages and even retirement pension contributions.

According to the research conducted by the Moore UK, the employer NI can rise by small and medium -sized companies alone by about 15 billion pounds, from 54.75 billion pounds to 69.72 billion pounds, and covers 16.6 million employees. With 37 percent of smaller companies that indicate taxes as a major challenge-and many of them already work on thin margins-it seems likely to be cost reduction measures. Reducing the advantages of employees or freezing fee is among the most common tactics that companies employ under financial pressure.

However, an increasing number of small and medium -sized companies adopt the plans for sacrificing confusion, which enables employees to exchange part of their salaries from pension contributions or other non -cash benefits, thus reducing the total wage bill subject to Ni. Analysts say that such plans can collectively save small and medium -sized companies in the United Kingdom more than 4 billion pounds annually, which compensates for some NI increase in the cabinet. Supporters add that salary sacrifice also enhances stronger long-term savings among employees-a major consideration as the UK is struggling to a lack of pensions that are looming on the horizon across multiple generations.

Despite these advantages, salary sacrifice remains unpopular, partly due to the fact that many business owners are not aware of the extent of their implementation. Some industry experts argue that the government can make more effort to highlight the potential for sacrificing salaries to reduce the costs of the employer, and at the same time, to enhance the financial security of employees. In times of economic uncertainty, such a lifestyle for small and medium-sized companies may be pressure-and in time to reduce the burden on the horizon on NI higher accusations.