Nearly half a million UK businesses will benefit from a tax cut worth up to £1,000 from this week.
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 (NICs) bills.
Announced by the Chancellor at last month’s Spring Statement to reduce employment costs, 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% 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, demonstrating an enduring commitment to supporting smaller businesses. Firms will be able to employ four full-time workers on the National Living Wage without paying employer NICs at all."
94% 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 (87,000); the professional, scientific and technical activities industry (63,000); and the construction sector (52,000).