The Autumn Budget has left small businesses reeling, bracing for higher costs that threaten to erode their already thin margins. The UK's smallest enterprises, often the backbone of the economy, are once again shouldering the heaviest burden as the government scrambles to balance its books. As the tax burden rises to a record 38% of GDP, small and medium-sized enterprises (SMEs) are facing a perfect storm of increased operating costs.
Frozen tax thresholds are pulling more income into tax and National Insurance, squeezing households and reducing disposable income. This, in turn, is expected to soften demand, making it even more challenging for SMEs to stay afloat. Two measures announced in the Autumn Budget have particularly significant implications for smaller businesses.
The decision to apply National Insurance Contributions (NICs) to salary-sacrificed pension contributions will raise employment costs, forcing employers to either absorb the cost, reduce the generosity of pension schemes, or reshape pay packages. The reduction in corporation tax writing-down allowances will also have far-reaching consequences. By effectively raising the tax cost of investing in plant, machinery, and other qualifying assets, the government is increasing the hurdle rate for investment.
This will make it more difficult for capital-intensive SMEs to justify decisions about upgrading equipment ← →
The Autumn Budget shows that SMEs are once again carrying the heaviest load. With the overall tax burden rising to record levels, cuts to capital ...Related perspectives: Check here
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