Four out of five employers stated that they were immediately impacted by the increase in national insurance contributions (NICs), according to research by the British Chambers of Commerce (BCC).
The BCC surveyed more than 1,100 UK employers and found that the NICs increase has caused negative impacts to 81% of businesses.
Firms said the rise in employer NICs from 13.8% to 15.05% has increased staffing costs, forced some to put up their prices and meant they would be limiting their investment.
As part of its call for an Emergency Budget, the BCC said the rise should be immediately reversed for at least a year, as firms battle surging costs on multiple fronts.
The BCC is calling for action to give businesses a chance to keep a lid on rising prices, boost productivity and ease cost pressures.
Hannah Essex, Co-Executive Director at the BCC, said:
‘Businesses are telling us that the rise in NICs has been a body blow as they try to get back on their feet. With firms’ profits also taking a further hit, after two years of the pandemic, it is no surprise that their investment intentions are also weakening.
‘But it is not too late to change tack and push the increase back until firms are in a better place to take on the extra burden. The costs crises facing firms and people in the street are two sides of the same coin. If we can ease the pressure on businesses, then they can keep a lid on the price rises.’
Internet link: BCC press release
Manufacturing trade body Make UK is calling for an emergency, pre-recess package of business support measures.
The call comes after a Make UK survey showed growth and orders slowing significantly with exports close to a standstill.
Make UK has made recommendations for measures the government can introduce now to address rising business costs, including:
- waiving or reducing business rates for the next 12 months
- implementing VAT deferrals for larger businesses and waiving completely for SMEs
- temporarily freezing the Climate Change Levy
- reviewing the efficacy of the business interruption loan schemes introduced during the pandemic and deploying a successor scheme
- extending the 130% super-deduction tax break, due to end in March 2023
- making the increase in the Annual Investment Allowance (AIA) permanent.
Stephen Phipson, chief executive of Make UK, said:
‘Whilst industry has recovered strongly over the last year we are clearly heading for very stormy waters in the face of eyewatering costs and a difficult international environment. This threatens to shatter expectations of a sustained recovery from the pandemic.’
Internet link: Make UK website
New homeowners are being warned about cold calls from rogue tax repayment agents advising them to make speculative Stamp Duty Land Tax (SDLT) refund claims, which could leave them with large tax bills.
The warning comes after a recent spate of Stamp Duty refund claims to HMRC failed to meet specific criteria.
The agents have been known to call new property owners after finding them through Land Registry records and property search websites, promising money back on ‘unknowingly overpaid’ SDLT.
Recent analysis undertaken by HMRC suggests that up to a third of claims for ‘multiple dwelling relief’ refunds were incorrect.
HMRC raises enquiries on these claims, but sometimes that is after the agent has taken their fee, leaving the homeowner to pick up the difference. Incorrect refund claims must be repaid with interest, with some potentially facing penalties as well.
Nicole Newbury, HMRC Director for Wealthy and Mid-sized Business, said:
‘We are seeing obviously spurious refund claims that are never going to succeed; but will lead to an unnecessary bill for the customer.
‘So, we are warning new homeowners not to get caught out by tax repayment agents promising easy money on a ‘no win, no fee’ basis. If it sounds too good to be true, it probably is. We want to help people get it right and avoid unnecessary tax bills, so treat promises of easy money with real caution.’
Internet link: HMRC press release
HMRC is extending the pilot for Making Tax Digital for Income Tax Self Assessment (MTD ITSA) to more self-employed workers and landlords.
From July, those taking part will be able to test MTD ITSA before April 2024, including their own internal processes for managing MTD.
Agents and customers are already taking part, and HMRC wants more agents to start signing up a small number of their clients to trial the system. It is noted that clients will need to have an accounting period that aligns with the tax year in order to take part in the pilot.
From April 2024, all businesses with annual income from self employment or property above £10,000 will have to follow MTD rules.
Under MTD, the quarterly reporting is a summary, providing a total of the incomes and outcomes going through the business per quarter. As a result, there is not necessarily a need to report under each property address as it is an accumulation of all the data that is required, HMRC said.
‘We want to ensure this is well tested before mandation, and that agents and customers have opportunities to feedback on how it will work in practice. That’s why we’re running a pilot, inviting agents to recommend clients who can help us test and learn.
‘The pilot is still a test environment. Those taking part have the benefit of testing the MTD ITSA before April 2024, including their own internal processes for managing MTD.
‘Agents and customers are already taking part, and we would like to encourage more agents to start signing up a small number of their clients.’
Internet links: GOV.UK
A growing number of UK businesses are at risk of going under as costs spiral and Covid loan repayments become due, according to a report from insolvency firm Begbies Traynor.
Although COVID restrictions have been lifted, some firms are still feeling the impact of disruptions to supply chains, and the price of energy and other inputs have risen sharply.
Firms are finding it hard to recruit staff in some sectors, and wage costs, including the minimum wage and national insurance payments, have gone up.
As the cost of living rises, many UK households are looking for ways to save money, putting further pressure on businesses that rely on discretionary spending, like bars and restaurants.
The construction and hospitality sectors are the sectors struggling most, according to the report.
Julie Palmer, Partner at Begbies Traynor, said:
‘The government’s finances are themselves taking a hit from the increasing interest environment; they are simply not able to introduce further significant funding into the system, and they now have a choice to make. Do they rush to recover funds handed out during the pandemic to ensure there was a functioning economy afterwards? Or look for ways to control the number of businesses that fail?
‘Having put so much money into protecting businesses over the past two years, ministers won’t want to see it wasted as companies collapse, unable to repay their debts.’
Internet link: GOV.UK