Turning to more immediate impacts, I would say that most focus has been on the changes to Employers National Insurance. In a double hit for employers, not only was the headline rate increased, the secondary earnings threshold also decreased. Many businesses have seen a material increase in the cost of employment and a direct hit to the bottom line as a result.
These changes impact all employers but the real pain is being felt in sectors that employ high numbers of low-paid and part-time workers, such as retail, leisure, hospitality and manufacturing.
For some, the only answer will be to revisit recruitment and staffing plans, or to pass some of the cost on to consumers. But businesses are also looking at strategies to mitigate the adverse impact of this change on profitability. Here tax leakage becomes critical. We think that the best approach is to focus on some areas where there can be low hanging fruit. We often find businesses aren’t making the best use of tax reliefs such as R&D, Patent Box and Capital Allowances. In good news for business, the government have confirmed that these reliefs will all be retained throughout this parliament. This means time spent on ensuring these claims are as robust as possible has the capacity to yield benefits for years to come. And it is always worthwhile remembering that timely claim submissions can really help cashflow.
