Prime Minister, David Cameron has unveiled plans to provide the UK’s small businesses with a new "Employment Allowance", which will reduce their National Insurance contributions (NICs) from 6th April 2014.
The £2,000 tax cut will give SMEs a significant boost as the coalition government seeks to underpin "the lifeblood of our economy".
Cameron is due to unveil the policy, which was promised in the Budget earlier in the year, in a bid to aid 1.25 million small companies, with around 450,000 of these no longer paying National Insurance.
The Government revealed that more than 90 per cent of the benefit of the new Employment Allowance would go towards aiding companies with fewer than 50 employees.
Cameron reaffirmed the government’s commitment to helping these small businesses to get wages in people’s pockets, food on their tables and drive the UK economy forward in the right direction.
"Small business and entrepreneurs are the lifeblood of our economy and this Government is firmly on their side," added Cameron.
Aside from the reduction of NICs, the Government is also hoping to solve another major bugbear of the nation’s small firms – late payments from larger companies they carry out work for.
Recent surveys have indicated as many as 85 per cent of SMEs in the UK have experienced problems regarding late payments from bigger businesses.
Cameron confirmed that, under new plans, large firms that delay payment to smaller suppliers will be penalised financially.
Katja Hall, of the Confederation of British Industry (CBI), said that late payment is a serious issue for businesses of all shapes and sizes, but the problem hits small firms harder as cash flow is their lifeblood.
It is thought that the Government will reveal a raft of new rules that SMEs can use to ensure bigger businesses release money when it is due. At present, many smaller firms opt out of utilising such rules for fear of falling out with their customers.
Image: Ben Fisher/GAVI Alliance
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