Employment Allowance should be increased at Spring Budget
01 Feb 2024
The Employment Allowance should be increased to £6,500 in the upcoming Spring Budget, says the Federation of Small Businesses (FSB).
This would help make it more viable for firms to maintain and extend jobs and hours, including to those currently economically inactive and others out of work, according to the business group.
The move would also help support businesses to afford the increases to the National Living Wage (NLW) in April, the FSB said.
The business group says that if employers' National Insurance contributions (NICs) stay the same from April 2024, the current £5,000 will only cover three full time employees instead of the four it was originally designed to cover at the NLW of £11.44 an hour.
In the years ahead, the Employment Allowance should be linked to the NLW to ensure it keeps up with wage increases, the FSB added.
FSB National Chair, Martin McTague, said: 'The Employment Allowance has been a big success, giving small firms a real shot at creating jobs and making their business thrive. Entrepreneurs are the ones who helped lead us to recovery after the 2008 recession, and we need to be creating a climate where they are encouraged to make a go of it, knowing they're doing so in a supportive environment.
'Small businesses are overwhelmingly the route into work for those who are currently out of work, and we need to be doing everything we can to support small employers.'