Although COVID-19 has taken a big baseball bat to the economy, most people have been protected from the effects by the Coronavirus Job Retention Scheme. The problem is that this will end in November, and many experts believe that we're all in for a bumpy ride when that safety net gets taken away.
Some ex-chancellors have even warned that we need to get ready for 1980s levels of unemployment. The Bank of England expects unemployment to rise from 4% to 9% by June, and that's before the scheme has even ended. The government has said that it won't be a cliff edge after the furlough scheme ends, and one change that could be made is to the Employment Allowance.
What is the Employment Allowance?
This tax break applies to small businesses in the UK who are allowed to reduce their annual NI (National Insurance) bill by up to £4,000. Larger businesses with NI bills over £100,000 are not able to claim this relief. Already, it is estimated that around 600,000 small firms are currently paying nothing in NI contributions. If you own an ecommerce website using DotGO's system or have an eBay store that you are thinking of moving to its own website, this measure applies to you.
What are the changes?
The government is looking at ways to reduce the tax burden on smaller firms and encourage recruitment, and it looks like there will be significant changes in the autumn. Reports suggest that the Chancellor is looking at substantially increasing this allowance - how much exactly remains to be seen.
Another possibility is for the government to completely scrap national insurance for small businesses completely this year, with some experts suggesting that this could save anywhere between 500,000 to 1 million jobs.
How effective this measure will be will depend on the state of the economy when the furlough scheme ends. If shops and industries remain closed, demand will remain weak. If there's no demand for goods and services, then companies are unlikely to start hiring people.
This is unlikely to be the only measure that will be announced and the Chancellor is mulling over a range of new measures to kick start the economy. In other countries such as Australia, the government is hoping to stimulate the construction industry by giving homeowners a cool AUS$25,000 to renovate their homes. It's going to be interesting to see what the government here comes up with when October comes to a close.
Want to keep up with the latest business, internet and technology news? Then check back regularly to the DotGO news blog. Or if you have a small business and you're looking for a unique website design, why not think about one of our bespoke but affordable business websites. Get in touch with us and find out what we can do for you.
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