Prime Minister Liz Truss announced that red tape would be cut for thousands of growing businesses as of Monday (3 October 2022).
The definition of a small business will now include businesses with fewer than 500 employees. This will make an additional 40,000 businesses exempt from future and reviewed regulations, potentially saving them thousands of pounds.
The move is part of the Government's wider plans to encourage economic growth and, according to the PM, will create "higher wages, better jobs and more funding for our public services and NHS."
Previously, the definition of small-to-medium enterprises (SMEs) only included those with less than 250 employees. SMEs are generally exempt from certain regulations and have less bureaucracy to deal with than their larger counterparts.
The exemption will be applied in a proportionate way to ensure workers' rights at the same time as reducing the burden for businesses.
The Government will consider extending the threshold to businesses with 1,000 employees once the impact of the new extension is known.
Business Secretary Jacob Rees-Mogg said:
"Our enterprising medium-sized businesses are being buried in pointless paperwork, preventing them from reaching their world-leading potential. That is why we are cutting red tape, starting with preventing unnecessary future regulations for these companies."
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