‘Jobs tax’ hike would devastate small businesses, says small firms’ champ

Mike Cherry

A Lancashire-based small business champion has slammed reports that National Insurance Contributions could be increased to pay for social care.

Sources claim Chancellor Rishi Sunak is in favour of a two per cent increase in the tax to fund future provisions for the UK’s ageing population.

The Government said it is likely to present its deliberations later this year, but there is speculation that an announcement could be imminent within days.

The Blackpool-based Federation of Small Businesses (FSB) said any NIC increase would be disastrous for employers and employees, as well as breaking the Government’s manifesto pledge of no tax rises.

FSB national chair, Mike Cherry, said: “Breaking a manifesto promise by increasing NICs just at the moment when firms are struggling to get back on their feet would be devastating for small businesses and the local communities they serve.

“NICs act as a jobs tax, making it harder for small firms to provide opportunities and invest to improve productivity.

“If this hike happens, fewer jobs will be created by the UK’s small business community over the crucial months ahead.”

He added: “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 returning, skills shortages and emergency loan repayments.

“This Government has rightly recognised the strain that NICs place on employers by increasing the Employment Allowance to £4,000, a move celebrated by firms last year alongside a NICs holiday for those who employ veterans.

“Rather than floating tax hikes, it should be continuing in that vein – reducing the jobs tax to give small firms the breathing space they need to spur our economic recovery.”

He said: “The measures put in place by the Government are already aiding job creation at the point when help is most needed.

“This mooted tax hike would reverse that progress when policymakers should be looking to build on it, with a further £1,000 uprating of the Employment Allowance.”