The latest Budget is out, and if you run a small business you’re probably thinking:
“Is this going to cost me more?”
Short answer: yes, a bit – especially if you employ staff or pay yourself in dividends.
But there are also a few things that might help.
Let’s break it down.
Staff wages are going up
From April, the National Living Wage and Minimum Wage are going up again.
That means:
- Anyone on lower hourly rates will need to be paid more
- Your overall wage bill will rise – and don’t forget pension, holiday pay and NI on top of that
What this means for you
- Plan for it now – update your budgets, so the increase doesn’t come as a shock
- If you lift the bottom rates, you may need to nudge up pay for more senior staff so they don’t feel squashed at the same level as new starters
- You won’t be able to compete with every big company on salary – but you can compete on:
- Flexibility
- Friendly culture
- Training and progression
That’s often why people choose to work for an SME instead of a big corporate.
Tax will quietly nibble away at take-home pay
The Budget doesn’t massively change income tax rates, but it does something a bit sneaky:
- Tax thresholds are frozen – so as wages go up, more people slowly move into higher tax bands
- From a future date, dividend tax goes up – which hits many small business owners who pay themselves via salary + dividends
What this means for you
- As a director/owner:
You may find you’re taking home less from the same level of profits. - For your staff:
Some employees may notice their take-home pay not stretching as far, even if their hourly rate has increased.
It might be worth:
- Having a quick chat with your accountant about the best mix of salary, dividends, and pension
- Being ready to explain to key staff that tax changes (not you being mean!) are part of why pay doesn’t feel as generous
Business rates: some help, some pain
The government is tweaking business rates again.
In simple terms:
- Some smaller shops, pubs, cafés and leisure businesses may get extra help
- Larger or high-value properties could end up paying more
Exactly what happens to you depends on your premises and rateable value.
What this means for you
- Ask your accountant or local council to help you work out your likely business rates bill for the next couple of years
- If your rates go down, consider using some of that saving to:
- Invest in your team
- Improve your tech or systems
- Fund training that helps you do more with the staff you already have
A few positives for growing businesses
- It’s not all bad news. There are some things aimed at businesses that want to grow:
- There’s more support for investment schemes (like EIS, VCTs and share options)
- This basically makes it easier for growing companies to:
- Attract investment
- Offer share options to key staff
What this means for you
If you’re a growing business and you’re competing with bigger firms for specialist staff, being able to say:
“We can’t match their salary, but you can share in our success through share options” can be a powerful selling point. You’d need professional advice to set this up – but once it’s in place, we can help you use it in your recruitment adverts and interviews.
What all this means for hiring and keeping good people
Put everything together and you get:
- Higher wage costs for employers
- Less take-home pay than people would like, thanks to tax
- Household budgets still under pressure
So candidates are:
- Thinking much harder about job security and career path
- Looking for employers who treat them like humans, not numbers
- Comparing not just salary, but flexibility, culture and benefits
For SMEs, that means:
- You need to be clear and realistic about what you can pay
- But you also need to sell what makes you different:
- Friendly team
- Hands-on owners
- Real responsibility
- Chance to grow with the business
- This is where a small business can absolutely beat a big brand.
Simple action list for SME owners
Here’s a quick checklist to work through:
- Update your wage forecasts
- Plug the new minimum wage rates into your budget
- Include pension, NI and holiday pay
- Review your pay structure
- If you are bringing new staff in on a new minimum wage, ensure you review your current staff also.
- Look at your benefits
- Do you offer anything you’re not shouting about?
- Flexible start/finish times, hybrid working, extra holiday, free parking – it all help
- Talk to your accountant
- Ask about dividend tax changes
- Check if things like share options or investment schemes are relevant for you
- Work out your business rates position
- Build any increase or decrease into your future plans
- Tidy up your recruitment approach
- Are your job adverts clear and attractive?
- Is your interview process structured and welcoming?
- Do candidates leave thinking, “I’d like to work there”?
How Arden Personnel can support you
You can’t control the Budget – but you can control how you:
- Structure your team
- Plan your hiring
- Present your business to potential employees
At Arden Personnel, we can help you:
- Check your salaries against the local market
- Rewrite job descriptions and adverts in plain English
- Plan permanent, temporary and temp-to-perm hiring that fits your budget
If you’d like to talk through what this Budget means for your business and your staffing, just give us a call on 01789 532220 or book a chat using our online calendar here.