Labour’s big budget – is it boom, bust or just a load of old baloney?

Paula Veysey-Smith • Nov 01, 2024

Most of you will probably think the latter.  If you are an employee, you’ll probably be pleased that you’re going to have the same take home pay as you did before the budget so why worry about the rest? 


Well, you should because your hard-earned money is not going to be worth as much going forward due to this budget.  So rather than the usual budget round up lets dig deeper into the impact on us all of the increase in Employers National Insurance rate.


Although all businesses will be impacted by this measure it is the smaller ones that will feel the greatest effect. Small businesses are heralded as the backbone of our economy.  Small and Medium Enterprises (SME’S) make up 99% of all UK businesses, employ 61% of total employees and produce a combined turnover of £2.4 trillion.  I work with owners of such enterprises and they are the hardest working people I know.  Running a small business can be very rewarding personally but often not financially.  It is simply a myth that owners of SME’s sit back and enjoy the profits of others labours; most are working long hours every day just to make ends meet.


The rise in National Insurance Contributions, arguable the biggest measure in the budget, will have a devastating effect on this the backbone of our economy. An increase in the rate to 15% coupled with the lowering of the threshold when it is paid to £5, 000 is forecast to generate £20 billion in tax revenue.  Yes, the allowance every business receives before contributions are payable has increased to £10, 500 but really this is just a small drop in the growing ocean of the tax burden. The additional cost to a small business of this measure alone will be enough to push some owners to call it a day and close their doors.  That will be a hard blow for some of those 61% employed workers affected by company closures; it won’t matter what was on their payslip as they no longer will receive one.


Business closure is just one impact from this increase. This measure is a tax on jobs, on working people, absolutely guaranteeing lower wages and higher prices. Tax and employee national insurance contributions may not have increased on the payslip but the amount of money any worker receives will be worth less going forward. The Office for Budget Responsibility (OBR) have already forecasted that 76% of the increase in Employers National Insurance will be passed on to everyday people through lower real wages, a combination of pay freezes/cuts and increased prices.


So, the definition of who the working person is has once again been dangerously misunderstood.  No wonder that we are already hearing of owners who have decided they can no longer continue.  The Labour government claims that this is a budget for growth but already the OBR has downgraded the UK’s forecast for growth.  How can there be growth without our small businesses, the backbone of the British economy.


It is not a green light for our economy, the future is not even orange.  Like the colour of the party that is responsible for delivering on the budget promises, the future could very easily be red.  It is without doubt that we are all going to pay the price for Labour’s extensive spending plans so I hope that they invest our money wisely.


We are experts in small business and have analysed all the budget announcements and how they may affect SME’s.  We can assist you with understanding how the increase in both National Insurance contributions and also minimum wage will affect your business and help you develop strategies to minimise the impact of this additional cost burden.


Get in touch with us today to discuss how we can support your business through these changes and ensure you’re well-prepared for the future.

A group of people are sitting at a long wooden table in a restaurant.

Labour’s big budget – is it boom, bust or just a load of old baloney?

by Paula Veysey-Smith • 01 Nov, 2024
Most of you will probably think the latter. If you are an employee, you’ll probably be pleased that you’re going to have the same take home pay as you did before the budget so why worry about the rest? Well, you should because your hard-earned money is not going to be worth as much going forward due to this budget. So rather than the usual budget round up lets dig deeper into the impact on us all of the increase in Employers National Insurance rate . Although all businesses will be impacted by this measure it is the smaller ones that will feel the greatest effect. Small businesses are heralded as the backbone of our economy. Small and Medium Enterprises (SME’S) make up 99% of all UK businesses, employ 61% of total employees and produce a combined turnover of £2.4 trillion. I work with owners of such enterprises and they are the hardest working people I know. Running a small business can be very rewarding personally but often not financially. It is simply a myth that owners of SME’s sit back and enjoy the profits of others labours; most are working long hours every day just to make ends meet. The rise in National Insurance Contributions, arguable the biggest measure in the budget, will have a devastating effect on this the backbone of our economy. An increase in the rate to 15% coupled with the lowering of the threshold when it is paid to £5, 000 is forecast to generate £20 billion in tax revenue. Yes, the allowance every business receives before contributions are payable has increased to £10, 500 but really this is just a small drop in the growing ocean of the tax burden. The additional cost to a small business of this measure alone will be enough to push some owners to call it a day and close their doors. That will be a hard blow for some of those 61% employed workers affected by company closures; it won’t matter what was on their payslip as they no longer will receive one. Business closure is just one impact from this increase. This measure is a tax on jobs, on working people, absolutely guaranteeing lower wages and higher prices. Tax and employee national insurance contributions may not have increased on the payslip but the amount of money any worker receives will be worth less going forward. The Office for Budget Responsibility (OBR) have already forecasted that 76% of the increase in Employers National Insurance will be passed on to everyday people through lower real wages, a combination of pay freezes/cuts and increased prices. So, the definition of who the working person is has once again been dangerously misunderstood. No wonder that we are already hearing of owners who have decided they can no longer continue. The Labour government claims that this is a budget for growth but already the OBR has downgraded the UK’s forecast for growth. How can there be growth without our small businesses, the backbone of the British economy. It is not a green light for our economy, the future is not even orange. Like the colour of the party that is responsible for delivering on the budget promises, the future could very easily be red. It is without doubt that we are all going to pay the price for Labour’s extensive spending plans so I hope that they invest our money wisely. We are experts in small business and have analysed all the budget announcements and how they may affect SME’s. We can assist you with understanding how the increase in both National Insurance contributions and also minimum wage will affect your business and help you develop strategies to minimise the impact of this additional cost burden. Get in touch with us today to discuss how we can support your business through these changes and ensure you’re well-prepared for the future.

Is it really smooth motoring offering employees electric cars?

by Paula Veysey-Smith • 11 Oct, 2024
With the electric car market opening up significantly in the past few years, offering e-cars to your employees through a salary sacrifice scheme can be a highly attractive proposition. With the tax incentives available and purchasing and leasing options, it is important to fully understand how to navigate these to ensure that the promised benefits are enjoyed by both the employer and employee.
UK Chancellor's red budget briefcase

How will Labour’s budget in October affect me?

by Paula Veysey-Smith • 30 Sept, 2024
On the 30th October 2024 the Government will deliver the first Labour budget for over a decade. More than that, it will be the first budget ever to be delivered by a woman, Chancellor Rachel Reeves.

What does the change in Xero’s subscription plans mean for me?

by Paula • 30 Aug, 2024
Xero is rolling out new subscription plans in the UK starting from September 12, 2024. These changes will simplify the current offerings by replacing the existing Starter, Standard and Premium with three new plans: Ignite , Grow , and Comprehensive . Additionally, the Ultimate plan will remain in place but be enhanced to offer more features. New Plans Overview Ignite is aimed at small businesses just starting out and includes essential accounting tools. Grow is designed for businesses looking to expand, offering more comprehensive tools, including payroll and expense management. Comprehensive provides full accounting and payroll capabilities, suitable for businesses with employees. Key points to note These new plans will bundle features that were previously add-ons, such as Xero Payroll, Xero Expenses, and Analytics Plus, into the base subscription. This change aims to reduce complexity and provide more value for the same or slightly adjusted pricing. The new plans are available from 12 September 2024 and you can move to a new plan when you like. However, Xero recommend waiting until they email you with your new proposed plan before migrating. This will happen late September 2024. Existing users will be gradually migrated to these new plans, with those benefiting from more features at the same or lower cost being transitioned first in February 2025. For users who may face a price increase, the migration will be delayed until September 2025 to allow for a smoother transition. Current plans price increases In addition to the new plans and their subscription fees the current plans as they stand are going to subject to a price increase from the 12th September 2024. Starter will increase to £16 per month, an increase of £1 per month. Standard will increase to £33 per month, an increase of £3 per month. Premium will increase to £47 per month, an increase of £5 per month. Ultimate will increase to £59 per month, an increase of £4 per month. Conclusion The change in pricing for existing plans combined with the upgraded new subscription plans has caused some confusion for Xero users. It is important to be aware of what change is going to impact you and when. Regarding the new plans Xero customers also need to know exactly what their new subscription is going to give them and what additional add ons may need to be purchased. MPower Accounting is a certified Xero advisor and we are on hand to assist you with the successful migration of your subscription to ensure you have the right Xero product at the best price point for your business. Please get in touch .
More posts
Share by: