Incentives and support for small businesses hiring staff

Bringing new people into your business is exciting, and each new team member can add skills that could help your business grow.

However, hiring staff can be tricky, and it can take time to find people with the right skills who will fit in with your company.

Big companies can offer better pay, making it harder for start-ups and small businesses to compete.

For start-up owners, small recruitment budgets and a lack of HR experience could make building your team feel overwhelming.

The good news is that help is available.

The government and other organisations offer support to make hiring easier and cheaper for small businesses.

This article only covers a few examples of the support available and business owners should seek independent and specialist advice to understand what’s available to them and their business.

What support is there for small businesses hiring staff?

Financial aid and grants

The government offers a range of financial aid and grants to support small businesses hiring staff.

These could make growing your business more affordable. 

The Apprenticeship Levy (soon to become the Growth and Skills Levy) helps pay for training apprentices.

Large companies (with annual salary bills of over £3 million) pay into this fund.

If you’re a small business, you could get:

• 100% of training costs paid for apprentices up to age 21
• 95% of costs paid for older apprentices (over the age of 21).

Costs are paid up to the funding band maximum and any training costs above this maximum must be paid by the employer.

Remember, as an employer you would still be responsible for paying the apprentice for their normal working hours and any training they do as part of their apprenticeship. 

Read our start-up owners’ guide to apprenticeships.

To apply, you should show your ability to provide employment and training opportunities and meet specific eligibility criteria.

You may also be eligible for local business grants depending on your business location.

Check your local council’s website for business support pages and grant information, or visit the Government’s ‘Find a grant’ service.

If you need additional finances as you hire new employees, you might consider a Start Up Loan of up to £25,000, which could help you cover initial staffing costs while your business grows.

Tax incentives

Tax breaks could improve cash flow or cut down on costs and stress when you’re growing your team, so you can focus on finding the right people.

Employment Allowance 

One valuable incentive you may want to explore is the Employment Allowance, which helps eligible employers reduce their annual employer National Insurance bill by up to £10,500, providing substantial savings on employment costs. 

Read our guide to Employment Allowance for start-ups.

Making the most of any other tax reliefs or benefits you’re entitled to could also be a good idea, as is taking independent and specialist advice.

Small Employers’ Relief (SER)

If you are a qualifying small employer paying £45,000 or less in Class 1 NICs in the previous tax year, you could claim the Small Employers’ Relief (SER).

SER allows you to reclaim a higher percentage of statutory parental payments (such as maternity, paternity, adoption, and parental bereavement pay).

Instead of the standard 92% reclaim, eligible employers can reclaim 108.5% of these payments, effectively boosting their cash flow.

Research and Development (R&D) Tax Relief

If your business works on new or improved products, services, or processes in the field of science and technology, you might qualify for Research and Development (R&D) Tax Relief if your company pays UK Corporation tax.

You could claim R&D tax relief that covers staff salaries, which reduces your tax bill and helps cover the cost of hiring staff.

Using these tax breaks could help your finances and make it easier to hire more people.

The money you save could be used for other important things, like product development or marketing.

Recruitment pool strategies

Building a diverse and inclusive talent pool could increase your chances of hiring success.

Casting a wider net will give you access to a broader range of skills, experiences, and perspectives.

Start by broadening your job advertising methods to reach a variety of demographics. 

You might use general job sites like Indeed or Reed, social media platforms like LinkedIn, niche job boards, and community organisations that reach diverse groups.

Creating inclusive job descriptions is crucial – avoid using language that might unintentionally discourage particular groups from applying.

Remember that diversity goes beyond visible differences.

Having employees with different backgrounds and experiences strengthens your team – people with different viewpoints often develop better solutions to problems and more creative ideas.

Focus on the essential skills and experience needed rather than unnecessary requirements that might limit your candidate pool – try our free job description template.

Creating an inclusive environment where all employees feel valued and supported could be key to fostering a positive workplace culture. 

Read our guide on how to hire staff for your business.

Training and apprenticeship schemes

Training schemes and apprenticeship programmes could be good resources if you want to develop and retain a skilled team of employees for your start-up.

Apprentices learn job skills by working alongside experienced staff.

They get real experience that helps your business right away.

The best part is that the government pays for most of the training.

It covers 95% or more of training costs, plus there is an incentive payment for hiring apprentices under 19 or those requiring extra support, making this particularly cost-effective for start-ups. 

Find out more about how to take on an apprentice. 

The National Careers Service’s Skills Bootcamps offer free courses covering various sectors from digital to business and construction.

These courses help your current employees learn new skills or improve what they already do.

Support networks and resources

Engaging with support networks and resources could be a great way to find guidance on recruitment.

Here are a few support networks and resources you could use: 

• Federation of Small Businesses (FSB) offers members access to employment contract templates, a legal advice line for hiring questions, and networking events. Their HR hub includes step-by-step recruitment guides tailored for small businesses 
• British Chambers of Commerce operates through local chambers across the UK, offering region-specific recruitment services, local talent pools, and training programmes. Many chambers also host job fairs and networking events that can help you connect with candidates in your area
• GOV.UK offers comprehensive information on government-backed schemes, grants and employment regulations, keeping businesses informed and compliant. The Business Support Helpline (0800 998 1098) offers personalised guidance on accessing government support for hiring and training staff
• Advisory, Conciliation and Arbitration Service (ACAS) provides free templates for job descriptions, contracts, and interview questions, along with a helpline (0300 123 1100) for advice on fair recruitment practices and employment law compliance.

These organisations can help you make better decisions when hiring staff for your start-up.

Their advice and support could help you build a strong team while your small business grows. 

For more help with your first hires, read our first-time employer’s guide to hiring staff.