Around One Million SMEs Will Be Able To Save Substantial Sums Of Money Because Of The Employment Allowance

More than one million small firms across the UK will be able to make "significant" savings this year because of the new Employment Allowance.

The measure, which was originally announced by chancellor George Osborne during Budget 2013 allows startups and SMEs to save up to £2,000 per year on their National Insurance Contributions, enabling businesses to invest in new jobs and growth, reports BMM Magazine.

It is thought the measure was brought in by the coalition in an attempt to reduce stubbornly high unemployment rates in all regions of the UK.

Despite recent drops in the base rate of unemployed people across the country, government ministers are still thought to be nervous about the number of jobless people in the run up to the May 2015 elections.

According to a new poll commissioned by the Department for Business, Innovation and Skills, 44 per cent of employers are influenced to hire new employees by business-friendly regulation changes.

But recruitment still remains problematic for many companies, with nearly a quarter of SMEs surveyed stating they find it "difficult" to find the right types of candidates for their opening.

Matthew Hancock, minister for skills and enterprise, said: "As businesses grow, it is crucial to recruit and retain staff with the right skills and attributes to go further, an area we support through Apprenticeships and through the business recruitment advice across government’s small business services.

"Government is backing Britain's small businesses by supporting them to grow to their full potential, nurture new talent and skills."

According to the government's Great Business programme, which aims to promote SMEs in the UK, over 500,000 small firms were launched in the UK last year.

The coalition argues its business-friendly regulations are helping to foster growth, but Labour says more should be done to encourage startups to grow into larger businesses that would support higher rates of employment in poorer regions like the north-east of England.

Expert Opinion

The Government is among a number of business organisations which have repeatedly stated in recent times that small businesses have a huge role to play in supporting the ongoing improvements being seen in the economy. <br/> <br/>"However, the flipside of such statements is that SMEs themselves need support to get off the ground and begin the process of growth which will allow them to make such an important contribution. <br/> <br/>"An initiative of this nature is a strong step forward which will allow small businesses to focus on their core concern of developing services, their workforce and operations to take the next step forward in their ambitions. We would urge small businesses to carefully consider how they can use this scheme to their advantage and they should also seek legal support on the key issues to bear in mind." Fergal Dowling - Partner