One in five small to medium businesses (SMEs) believe it will become more difficult to pay their tax bills, according to data from Premium Credit.
There are almost 5.5million SMEs in the UK, and up to 440,000 are already struggling to pay their tax bills.
Worry is growing following the 1.2% increase to National Insurance Contributions and the minimum wage rising in Rachel Reeves’ Autumn Budget.
Premium Credit’s chief commercial officer Jennie Hill said: “Paying tax bills is a long-running issue for SMEs and the latest tax increases are expected to add further pressure.”
This rise will lead to businesses finding ways to cut costs, because to qualify as an SME, the company must have less than 250 employees and a yearly turnover of less than £43million, meaning that this seemly small increase could be detrimental.
Effects are already being seen, with 19% of SMEs surveyed admitting to laying off staff to afford their HMRC payments.
Consumers will have been directly affected as 71% of SMEs have increased their prices, according to the advisory firm Grant Thornton.
Like many, SMEs have struggled financially with the cost-of-living crisis, with paying tax bills becoming harder since the beginning of this period, according to 21%.
Almost a third of SMEs believe tough times are ahead and predict they will struggle with their tax bills in the next five years.
Businesses should prepare for the future according to Hill, but many are already thousands of pounds in debt.
Hill said: “Of course, firms should plan ahead and ensure they have money set aside to meet bills when they are due, but cashflow issues can be a problem, and owners will be focused on running their business effectively.
“Any company which is struggling should consider spreading the cost into convenient monthly payments to help them pay their tax on time and improve vital cashflow.”
Around three in ten SMEs say they will take on more work to afford their bills, but 27% are considering taking out a loan.
HMRC are in communication with almost 400,000 SMEs in Premium Credit’s research about paying their bills over a longer period.
These businesses will be hoping to join the 32% that already have payment plans in place.
Featured image: Jakub Żerdzicki/Unsplash
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