National Insurance hike would leave firms facing tough decisions - Chamber

A National Insurance hike in this week’s Budget would leave many businesses facing difficult financial decisions, business leaders warned today.

According to reports over the weekend, Chancellor Rachel Reeves is set to increase National Insurance for employers in a bid to boost funding for public services.

The Chancellor is also expected to use Wednesday's Budget to lower the threshold for when employers start paying the tax.

Employers currently pay National Insurance of 13.8 per cent on a worker's earnings above £175 a week.

However, Greater Birmingham Chambers of Commerce (GBCC) warned that any hike would place additional strain on SMEs, who are already faced with mounting cost pressures.

Henrietta Brealey (pictured), chief executive of the GBCC, said: “It is incorrect to say that raising employer National Insurance would not impact working people.

“The majority of people in the UK are employed by SME businesses, many of which have faced real challenges in adapting to the significant rise in the cost of doing business in the UK in recent years, driven by inflation and labour market shortages. 

“These businesses are not sitting on millions of pounds in profits and will need to make difficult decisions on where they find the money to pay an additional tax bill such as this.

“By increasing the overheads that businesses have on employing people, it reduces the amount of money available for pay rises or other investments.

“It adds additional strain to the challenges of running a business for the hard-working entrepreneurs who take the bold risk of starting and growing a business. 

“If the Government are going to achieve their pledge of growing the economy they need to give businesses of all sizes the confidence and the right tax and regulatory environment to support their growth potential.

“The Government have a unique and critical opportunity to show how they can strike a sophisticated balance - dealing with the very real challenges facing the public purse without stunting the same business growth that they need to deliver on their manifesto and fund their investment pledges.

“Wednesday's Budget is their first big test of this. We wait to see what the final package of measures will contain. 

“At the Chamber we will continue to brief our members on the implications of the latest developments and champion their needs and interests. If the UK wants thriving communities and public services, it needs thriving businesses.”