Tough week for small businesses as they are hit with 3 big new costs and rules.
- New rates for National and Minimum wages
- Increase in Business Rates expected to be additional £200m
- Making Tax Digital implementation.
- Pension Auto enrolment increases
Today, April 1st 2019, we see the National Living Wage and National Minimum Wages increase.
Now, hourly the rates are :
- Age 21-24: £7.70 an hour
- Age 18-20: £6.15 an hour
- Under 18: £4.35 an hour
- Apprentice: £3.90
Bosses must legally meet these entitlements, keeping certain rules applied;
- Apprentices are entitled to the apprentice rate if they’re aged 19 or under, or are aged 19 or over but are in the first year of their apprenticeship
- You must be at the school leaving age of 16 or older, to qualify the minimum wage
The living wage also rose to £8.21 an hour. The living wage differs to the minimum wage – though they are both subject to the values set by the government – the living wage is not a legal requirement. The living wage is ‘voluntary’, though many organisations do engage in it.
Yes…this is a benefit for us all! Part time workers, those in hospitality and retail and particularly the North East of England area, receiving the greatest impact.
However, there are some disadvantages;
Firstly, around 6million workers, despite a pay rise, are still set to be earning less than the real living wage, with struggles to fund their lifestyles. There is a high rate of poverty within the UK at this moment in time, not helped by an increase in living costs with un-matching incomes.
Business Rates Impact
Business rates are rising by approximately £200m across businesses. Mike Cherry, national chairman of FSB, called business rates an “unfair, regressive tax”, stating they hit small firms before they’ve made their first pound in turnover, let alone profit.
The increase On top of this, the third year of the business rates revaluation period which began on 1 April 2017 in England and Wales has also started, meaning about 500,000 firms will lose transitional caps on their rising bills.
Pension contributions to increase
One million businesses will be faced with further increase to auto-enrolment pension contributions as of 1 April. The minimum total contribution to such schemes is set to rise from 5% to 8% of employees’ qualifying earnings, and employers will be legally required to shoulder 3%.
Most importantly, the effect for businesses. Already this year, we have seen a higher rate of company insolvencies due to increased costs.