Tax cut worth up to £1,000 for small businesses

Britain's Chancellor of the Exchequer Rishi Sunak is getting ready to announce the budget

Rishi Sunak announced the tax cut in his budget - Credit: POOL/AFP via Getty Images

Devon businesses can now benefit from a tax cut worth up to £1,000. 

The Employment Allowance has risen from £4,000 to £5,000 – meaning smaller firms will be able to claim up to £5,000 off their employer National Insurance Contributions bills. 

Announced by the Chancellor at last month’s Spring Statement, the change takes an extra 50,000 firms out of paying NICs and the Health and Social Care Levy. This increases the total number of businesses not paying NICs and the Levy to 670,000. 

Chancellor Rishi Sunak said: “This tax cut for half a million businesses will help them thrive and grow to help drive our economic recovery. 

 “It comes on top of a suite of wider tax cuts available to firms, including 50 per cent business rates relief, a record fuel duty cut and the super-deduction, the largest two-year business tax cut in our history.” 

This is the third time the government has increased the Employment Allowance since its introduction in 2014. Firms will be able to employ four full-time workers on the National Living Wage without paying employer NICs at all. 

94 per cent of businesses benefitting from the £1,000 increase are small and micro businesses, and the sectors that will see the highest numbers of employers benefitting are the wholesale and retail sector; the professional, scientific and technical activities industry ; and the construction sector. 

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Michelle Ovens CBE, founder, Small Business Britain, said: “The Chancellor’s move to increase the employment allowance is welcome, and will certainty play a role in helping those businesses with employees deal with the huge cost-of-living challenges they are currently facing. In particular, it is good to see the immediacy of this rise in employment allowance, which will go towards helping businesses asap.” 

Martin McTague, National Chair of the Federation of Small Businesses, said: “The increase in the Employment Allowance helps small firms do what they do best, creating and sustaining jobs. 

“This was FSB’s ‘hero ask’ at the Spring Statement, and we have hugely valued the time taken by Treasury officials to work with us on the positive impact this will have not just on work opportunities, but also training and investment. 

“The Chancellor has now raised the Allowance twice since his appointment, stepping up for small businesses.”