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@Dammit
Any process has a cost: taking in tax, then paying it back as a subsidy to an employee who isn't earning enough to feed themselves is inherently inefficient - because you have to pay for that process to occur whereas paying the employee a living wage doesn't have the process cost of subsidising them.
So paying a living wage causes a reduction in costs for the whole of society.
The question then becomes how to enable smaller businesses to cope with the increased costs before (theoretically) the overall increase in money in the hands of citizens generates increased profits for the business in question.
Reducing other taxes is the logical answer, because you are saving governmental costs with the reduction in subsidy - so you can pass that on.
I'd suggest business rates would be the logical tax to reduce, but the problem here is that those go to local gov and income tax revenue is a central gov issue - so you'd need to address that imbalance, likely by direct funding of boroughs from central gov funds.
Putting more money into the hands of more people should lead to more money in local use, and increased velocity of money through the system as it's not taken in, processed, then payed back out as for e.g. Universal Credit etc.
Overall, if handled well, it should be win-win, with societal costs reducing whilst individual liquidity increases.