National Insurance contributions to rise?
A recent Times report has claimed that National Insurance contributions (NICs) could be set to rise. Despite the Conservative party manifesto pledge not to increase rates of NIC, senior ministers have apparently agreed to do exactly that.
The increase is allegedly to be an extra 1% to be paid by both employees and employers, which would raise an additional £10billion for the Government coffers. These extra funds would eventually be put towards reform of long term social care but initially used to reduce NHS waiting times.
- The number of people on an NHS waiting list is expected to rise from 5.3 million to 13 million post-pandemic.
- The Government’s aim is thought to be to be able to implement a cap on long term care bills of £50,000 per person.
The majority of employers currently pay NICs at a rate of 13.8%, while most employees pay NICs at 12% on their earnings.
Mike Cherry, chairman of the Federation of Small Businesses, said: ‘A lot of business owners have had the worst 16 months of their professional lives. Many firms are now struggling with staff being pinged, emergency loans and late payments. National Insurance contributions essentially serve as a jobs tax, making it harder for them to create opportunities. To hike them as the furlough scheme and wider support measures end would stop our economic recovery in its tracks before it’s even started.’
Any increase is expected to take effect from April 2022.
We will of course keep you up to date on any announcements or further reports, but if you have any questions in the meantime, please get in touch.