A survey carried out by the Institute of Directors (IoD) has found that as a result of the increase in national insurance contributions (NICs) three in ten businesses now plan on employing fewer people.
Plans to provide an additional £12 billion per year of funding for health and social care, funded by a new 1.25% Health and Social Care Levy were announced by Prime Minister Boris Johnson last month.
The UK-wide Health and Social Care Levy will be based on ring-fenced national insurance contributions (NICs) which already help to partly fund the NHS. A transitional increase to the main and additional rates of NICs will take effect from 6 April 2022 and will last during the 2022/23 tax year only: at this time, NICs for working-age employees, the self-employed and employers will increase by 1.25% and will be added to the existing NHS allocation.
The Institute of Directors (IoD) survey revealed that 83% of business leaders support the need to increase taxes to invest in health and social care. However, 68% oppose the higher tax rates levied on national insurance contributions (NICs) and dividend payouts.
Commenting on the issue, Kitty Ussher, Chief Economist at the Institute of Directors (IoD), said: ‘This research is a stark warning to the government of the impact that the national insurance rate rise is likely to have on jobs. If, as they intend, three in ten businesses decide to employ fewer people as a result of this tax change, the effect will be felt across the economy just at the time that the furlough scheme is ending.’