By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs
UPDATED: The government’s expected 1.2 per cent hike in national insurance will cost businesses up to £3.5bn to match employee contributions, economists have warned.
The Institute for Fiscal Studies estimates that if £10bn of additional revenue is generated by the NI tax increase, businesses will need to find between £3bn and £3.5bn extra from April.
The self-employed will also face the NI rise, though they already make lower contributions.
>See also: Small business owners face increased national insurance contributions
Professor Len Shackleton, research fellow at the Institute of Economic Affairs, described employer national insurance as a “crude payroll tax” which discourages lower-paid employment and is then passed onto workers in the form of lower pay.
Craig Beaumont of the Federation of Small Businesses told the Daily Telegraph: “Hiking the jobs tax on employees and employers would make it more expensive for businesses to create and maintain jobs.”
Mike Cherry, chairman of the FSB, told the newspaper: “This regressive levy is yet another outgoing for small businesses and sole traders to worry about against a backdrop of spiralling input prices, supply chain disruption, a deepening late payment crisis, rent arrears, rates bills