Running costs for small businesses will rise today as a series of hikes kick in.
More than 500,000 firms have been landed with fresh business rates hikes as the third year of the revaluation period starts, resulting in a further £187m being paid this tax year, while the National Living Wage has increased at its sharpest ever rate, increasing by almost 5% to £8.21 per hour for those aged 25 and over.
Pensions contributions will also rise at the beginning of the new tax year on Saturday with small business owners required to put more aside for employees saving into auto-enrolment pension schemes.
The minimum total contribution to such schemes will rise to 8% of an employee’s qualifying earnings, up from 5% last year. Employers will be required to shoulder 3% of the contribution.
In addition to these changes, the National Minimum Wage will also increase from £7.38 to £7.70 for those aged 21-24. These rises also mean higher National Insurance employer contributions, pension contributions and impact on differentials.
The cost hikes coincide with the introduction of the Making Tax Digital (MTD) programme from today, which is expected to impact the way almost two million small businesses report tax.
The Department for Business, Energy and Industrial Strategy (BEIS)’s own statistics show there were 27,000 fewer businesses in the UK in 2018 compared to 2017.
National chairman Mike Cherry said: “This truly is blue Monday for small business owners, and it comes at a time when confidence is already in the doldrums.
“Overall, this is a package of changes that increases the costs of running a small business. For the first time since 2010, we saw a contraction in the size of the UK business community last year. All Ministers and policymakers need to take note, and avoid bringing in new measures that would exacerbate this loss in 2019.”