UK firms could face £2,600 in additional employment costs, warns Federation of Small Businesses

Shruti Tripathi Chopra
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Small firms could be hit by spiralling employment costs
Small firms could be hit by spiralling employment costs (Source: Getty)

UK small businesses could face £2,600 in additional employment costs, the Federation of Small Businesses has warned.

The business lobby group called on UK chancellor Philip Hammond to use the upcoming budget to help small businesses tackle soaring employment costs.

In its submission to Hammond ahead of the 8 March budget, the FSB has urged action to "improve job creation and drive productivity across the nations and regions of the UK".

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An analysis by the business lobby group showed that the average FSB employer will face £2,600 in additional employment costs from government policy in the 2017/2018 tax year. This includes a hit from costs including the increase in national living wage resulting in an increase in national insurance contributions and the effects of pension auto-enrolment.

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Mike Cherry, FSB national chairman, said: “Spring Budget 2017 is a critical moment for the government to show it is unashamedly pro-business, and that the chancellor recognises that small businesses are the engines of job creation. Spiralling labour costs are now threatening their growth ambitions and hiring intentions. The Employment Allowance, created under the previous administration, has been a huge success and now it is time for this government to build on that, and help us to create the new jobs and growth that this country needs.”

The FSB also called for more support to the interests of the self-employed to encourage more people to set up businesses. It sought a "statutory definition of self-employment, changes to the social security system Universal Credit to be responsive to income fluctuations, and incentives to help the self-employed pay for their retirement".

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