Small businesses considering hiring new staff during 2026 will need to make a leap of faith. Data published this week by the British Chambers of Commerce suggests firms are nervous about the outlook for the next 12 months: while around half of small businesses in the UK expect to see sales increase this year, almost three-quarters point to high labour costs as a significant pressure.
Those costs have increased following a raft of government measures, including last year’s hike in employers’ national insurance contributions and hefty rises in the national minimum wage. There is also concern about the impact of the Employment Rights Act, which finally passed into law last month and introduces new protections for workers that could prove challenging for some employers.
However, for firms in two minds about hiring new staff, it’s important to consider the help available as well as the potential difficulties of workforce expansion. Bringing in new staff could help your business accelerate its growth plans and the government offers a range of support and incentives to encourage smaller businesses to hire.
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For example, are you making use of the Employment Allowance, which could help your firm reduce its annual bill for national insurance contributions by as much as £10,500? Access the scheme by making a claim through the real-time information submissions that your business must now make regularly to HM Revenue & Customs as part of its regular payroll processes. You’ll then pay reduced employers’ national insurance contributions each time you run your payroll, until you’ve used up the £10,500 allowance in full.
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This scheme was expanded last April to cover all businesses, but smaller firms may also be able to make claims for backdated Employment Allowance from the previous four tax years. If your total liability for national insurance contributions in any of those years was less than £100,000 and you didn’t claim the support, you can make a retrospective claim to HMRC. The Employment Allowance was lower over this period, but you could still be able to claim as much as £19,000.
When hiring new staff, consider apprenticeships
The Small Employers’ Relief initiative is also worth investigating, particularly in the context of the Employment Rights Act, which gives employees access to more generous statutory benefits from their employers. With this scheme, small businesses that pay less than £45,000 each year in employers’ national insurance contributions can claim back more when making statutory payment such as maternity, paternity, adoption and parental bereavement pay. Most businesses are able to reclaim 92% of these costs, but this rises to 108.5% for firms that qualify for the relief.
Taking on one or more apprentices could be another possibility. The government is in the process of revamping the Apprenticeship Levy – soon to be relaunched as the Growth and Skills Levy – but small businesses will continue to benefit from the scheme. Larger companies, with annual salary bills of more than £3 million, pay into a fund, with some of the money used to help with the cost of training incurred by smaller firms that take on apprentices. Smaller firms are still expected to fund the cost of paying their apprentices, but training costs are met by the scheme. You can claim 100% of these costs for apprentices aged up to 21 and 95% for any other apprentices on your books.
Finally, don’t overlook the broader support available to businesses. The Gov.uk website carries details of a broad range of initiatives, from free recruitment support to advice on training from the National Careers Service. A number of regional initiatives and charitable organisations also offer grants and financial incentives to support hiring.
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