Accountancy firm Moore UK’s latest Owner Managed Business Survey found that 44% of UK small- and medium-sized enterprises (SMEs) were worried about how the increase in employer national insurance contributions (NICs) would affect them. The National Insurance increase is estimated to cost businesses an additional £25bn a year.
In 2023, there were about 22,830 SMEs (including no employees, small and medium) in the food and drink manufacturing sector. SMEs accounted for 98.8% of businesses in food and drink manufacturing.
More than a third (37%) cited tax as one of the biggest challenges facing them in the next three months, up from 21% just 12 months ago. Tax was now the second highest concerns of owner managed businesses, just behind costs such as energy and property.
‘Further than expected’
Commenting on the survey, Moore UK chief executive Mark Lance said: “Tax increases in the Budget went further than many business owners expected – many now worry that their businesses will suffer as a result. Business owners will have to decide whether they pay for the National Insurance increase by reduced profits, cost cutting or by putting up their prices. None of those solutions are very palatable.”
“Owner-managers feel the increase in employer NICs puts too much of the tax burden on their businesses. Our research shows that the perceived burden of taxes has become a much bigger worry following the budget.”
Tax rises in the budget will make it harder for businesses to commit to capital expenditure (29% of respondents), while a further 29% said the Budget would make hiring new employees harder – entrepreneurs concerned about their business’s tax bills will not be confident about investing or growing their workforce.
“Owner-managed businesses are major employers in the UK – a Budget that impacts their recruitment affects the whole job market,” Lance added.
Despite the doom and gloom surrounding the budget, business owners are positive about the recent Employment Rights Bill. Nearly half (49%) said they were positive about the bill, while less than a quarter (24%) saw it as negative.
Welcome change
Many of the measures proposed in the bill – such as a ban on zero-hours contracts and provides ‘day one’ protection from unfair dismissals – have been broadly welcomed by small business.
“Business owners actually welcome many of the measures in the new Employment Rights Bill,” Lance continued. “We find that business owners are keen to be good employers and treat their employees well – and that lines up with the positive views on the Employment Rights Bill.”
Attitudes toward trade with the EU were also mostly positive, with 58% of business owners confident that trade with the single market would become easier in the next 12 months.
With this in mind, Lance urged the government to make improving trades ties a key objective for the coming year and beyond.
