NI Rise forcing tough decisions for UK SMEs

• 50% of UK SMEs expect the policy to hinder business growth
• Increasing prices (24%) is the most common response to the challenge
• Around one in ten (9%) businesses are looking to reduce pension contributions

In the aftermath of the new Labour Government’s first Budget, businesses are looking to how best mitigate the impact of the announced rise in employee National Insurance.

Half of UK SMEs (50%) expect the policy to hinder business growth, with 31% saying it will hinder their own business specifically, according to new research from Simply Asset Finance. Just 34% of businesses say that they don’t need to do anything in response.

While most sectors are similarly impacted, it is among the Agriculture, construction, and manufacturing sector that the biggest challenge is being faced. Here, just 11% say they won’t need to take any mitigating steps.

Among businesses across the country, the most likely response is price increases (24%). But the findings also reveal that employees are likely to bear a significant burden too. Just under one in five SMEs (18%) say they plan to freeze recruitment, 16% expect to cut back on employee bonuses, 15% are looking to reduce the number of employees, and 14% anticipate putting ‘staff perks’ on the chopping block. The impact is also going to hit employees’ retirement as well, with around one in ten (9%) saying that they are looking to reduce pension contributions.

It is among businesses in the North and the regions (Wales, Scotland, and Northern Ireland) where there is least appetite to increase prices in response – just 18% and 19% accordingly. And it is those businesses based in the Midlands whose growth plans appear most resilient – just 7% expect to downgrade their growth/ expansion plans in response to the NI increase.

When looking at where in the UK businesses are feeling most unaffected or best prepared to manage the rise, it is SMEs in the South (excluding London) that comes out on top. There, more than two in five businesses (43%) say that they won’t need to take any steps to mitigate the change.

Mike Randall, CEO, Simply Asset Finance comments: “Research we carried out in advance of the budget found that increased costs was clearly identified by UK SMEs as one of the biggest threats to their business in the coming year (37%). So this hike in contributions risks being a real spanner in the works and could see businesses significantly dial back their growth ambitions for the coming years. 

“But while the initial reaction to the rise may well be to regroup, retract, and retrench, that doesn’t need to be the case. There remain substantive opportunities for businesses to invest and grow. Here, working with a lender that can provide tailored solutions, while understanding the need for growth is essential. As changes like the NI increase impact costs, businesses may need to restructure their debts to ensure continuity of their operations. Lenders that can provide this flexibility will be best placed to help businesses carry the NI burden while also mitigating its impact on their growth ambitions.”

-ENDS- 

Media contact

Teamspirit

simplyassetfinance@teamspirit.co.uk

About Simply Asset Finance

Simply Asset Finance was founded in April 2017 by a team of asset finance specialists, in response to the need for innovation and disruption in the sector.  It offers an alternative financial model to banks and looks beyond a balance sheet and credit rating, supported by a digitally enabled customer journey. Simply Asset Finance consider a customer’s potential and work with them to identify and implement the best solution to help them succeed. Their highly experienced sales team is made up of people with extensive knowledge of the industries they lend to. This means they understand the day-to-day challenges that businesses face and the dedicated support teams guide customers through the process, helping them every step of the way.

Simply Asset Finance has lent more than £1.3bn to over 7,400 small and medium businesses across a wide range of sectors including transport, construction, manufacturing, recycling, and agriculture.