39% Of SMEs To Offer Staff Benefits To Mitigate NIC Hike

As the Chancellor prepares her Spring Statement amid ongoing concerns over the rate of inflation, a new survey) of SME decision makers suggests a third of businesses (35%) are planning to implement price increases to help mitigate the uplift in NIC from April 2025. Furthermore, 39% of firms are planning to introduce staff benefits to avoid higher wage bills.

Key Findings:

• 35% to introduce price increases

• 1 in 5 plan to cut headcount

• 31% plan to invest in employee development

• Enhanced Employment Allowance to be used by 21%

• 21% to offer more flexible benefits in lieu of salary

• 18% to offer salary sacrifice schemes

The survey conducted for Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance to SME owners and directors found that while price rises are the most common NIC mitigation measure, training and alternatives to pay rises are on the cards for the employees of SMEs.

Close to a third (31%) plan to invest in training and development to make the best use of current resources; and 39% plan to offer staff more flexible benefits in lieu of salary (21%) or salary sacrifice benefit schemes (18%). This may include pension contributions, cycle to work schemes, childcare vouchers, additional annual leave and health and well-being benefits.

While 19% plan to reduce headcount, 13% of the SME decision makers surveyed said they are taking a pay cut themselves.

The survey of businesses employing up to 250 staff also found that 21% plan to use the Enhanced Employment Allowance which will rise from £5,000 to £10,500 per year. A business can claim Employment Allowance if they their employers’ Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.

Todd Davison, MD of Purbeck Insurance Services said: “Many SMEs are planning to maximise the skills of their existing employees rather than take people on according to the survey. They are also finding new ways to reward staff over and above financial remuneration."

“There is little doubt the NIC hike is making businesses think hard about where they can save on their salary bills. This may have unintended consequences for those SMEs competing for skills against larger businesses with deeper pockets as well as those that offer overtime pay and bonuses. It all adds to the strain on finances that we see first-hand at Purbeck Insurance Services."