If The Payroll Tax Increase Goes Ahead What You Need to Know

Updated: Mar 5

The year 2022 is going fast like the speed of the light, as we’re already in the middle of February. Surprise, surprise it looks like our prime minister Boris Johnson and finance minister Rishi Sunak may agree to a payroll tax increase. Which looks to go ahead in April which is the start of the financial quarter. Despite concerns that it may cause more financial stress on households and small businesses to tighten their budgets even more. As a business owner you may want to know on how the possible increase in payroll tax will affect your business. This article will help you understand how it may you and your business.

Rise in National Insurance

The rumoured rise in National Insurance is expected by 1.25% points which mean you as a business owner will pay more in contributions to the Uncle Sam aka Inland Revenue.

Increase in Employee Wages

As inflation is expected to go up so will employee wages to keep with the standard of living. At the moment Britain’s inflation is at 5.4% which is the highest rate in almost thirty years. As a business owner the biggest cost to your business is your employee’s wages. So, this will no put more pressure to improve productivity and cut costs for your business

Increase in Expenditure

If you’re paying in more tax and wages, no doubt your overall spending for your business is going to increase. We recommend to shop around and look for ways to reduce your operation costs if needed. Make sure you plan a budget and consult your accountant or finance director to help make sure your spending within a manageable budget.

For more advice regarding payroll as well as keeping your business costs down. Please email us for any queries.

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