How outsourcing can help you manage rising costs of upcoming taxation changes

Starting on April 6, 2025, the Employers' NI rate will increase from 13.8% to 15%, and the threshold for Employers' NI contributions will reduce from £9,100 to £5,000.  To limit the impact of these adverse changes, the employment allowance (which reduces the employer's NI lability) increases from £5,000 to £10,500 for the whole business and is being made available to all businesses (removing the previous cap of total employers’ NI of £100,000). 

The overall impact of these changes to Employers NI presents some significant challenges for businesses, particularly in an economy facing less-than-optimistic growth forecasts.

To mitigate any adverse impact of these changes, it is essential to increase business efficiencies and streamline processes. One way to do this could be by outsourcing your finance function.

Six benefits of outsourcing 

1. Cost savings

By outsourcing, businesses may be able to reduce overhead costs associated with maintaining an in-house finance team, such as salaries, benefits, and office space. This saving could be achieved by utilising market leading technology, streamlining processes and having highly skilled people in place.  

2. Scalability

As your business grows, your financial needs will evolve. Outsourcing provides the flexibility to scale services up or down based on your requirements, ensuring that you always have the right level of support. 

3. Access to expertise

Outsourcing allows businesses to tap into a pool of highly skilled professionals who bring a wealth of experience and knowledge. This ensures that your financial operations are managed by experts who can provide valuable insights and strategic advice. 

4. Only pay for what you need

Outsourcing allows businesses to pay only for the amount of support they require, avoiding the fixed costs associated with full-time employees. This flexibility ensures you do not have underutilised resources in the business and makes it a cost-effective solution which is tailored to your needs 

5. Ease of transition

Moving from an in-house model to an outsourced solution is straightforward, regardless of the size of your business. This is done by having a comprehensive onboarding process and dedicated support to ensure a smooth transition, minimising disruption to your operations. 

6. Increased control

Outsourcing your finance function can enhance control by providing real-time access to financial data using technology. Implementing appropriate technology allows the opportunity to improve the visibility of financial performance and build robust financial controls to protect against fraud and enhance your control environment. 

Future-proofing your business 

The current Labour government has indicated that further tax increases may be necessary to balance the books. By outsourcing your finance team, you may be able to shield your business from the full effect of potential future increased staff costs. Outsourcing provides a scalable and adaptable solution that can help you navigate changing economic conditions and regulatory requirements. 

The upcoming increase in Employer NI contributions presents a significant challenge for businesses. However, strategically outsourcing your finance team can mitigate the financial impact, access top-tier expertise, and leverage advanced technology to optimise your operations. This proactive approach helps manage current costs and positions your business to adapt to future changes in the economic landscape. 

By taking these steps, businesses can help themselves remain competitive and resilient in the face of evolving financial pressures. 

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If you’d like to understand more about outsourcing your finance team, please do not hesitate to get in touch.

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