National Insurance contributions rates ‘poised to increase’
The Government could be set to raise National Insurance contributions (NICs) by 1% for both employers and employees, a report has claimed.
The Times claimed senior ministers have agreed to increase rates to raise an extra £10 billion a year for the National Insurance Fund. This would initially be used to reduce NHS waiting lists, before helping to fund longer-term social care reforms.
Most employers pay NICs at a rate of 13.8%, while the majority of employees pay NICs at 12% on their earnings in 2021/22. The move, which would go against a Conservative manifesto pledge not to raise NICs rates, has been greeted with dismay.
The Federation of Small Businesses (FSB) slammed the idea of raising the ‘jobs tax’, with many firms still reeling from COVID-19. Mike Cherry, chairman at the FSB, 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. “NICs 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 move could potentially take effect from April 2022.
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