National Insurance Rise

Saying NO to the National Insurance Contributions Rise

Businesses both large and small are more than familiar with the devastating effects the recession has had on the economy. But along with cut backs and job losses, the business community will now have to contend with a 1% National Insurance Contributions increase.

Is the National Insurance Contributions Rise Necessary?

With the recession in limbo, the Government is attempting to rectify the public spending deficit and pull us through the recession to ensure the economy returns to how it should be. To progress with this plan, they have announced a 1% increase for NICs starting in April 2011. This new tax rise is expected to raise £3 billion a year which will help consolidate public finances, according to a HM Treasury Spokesmen.

Hitting Small Businesses Hardest

The new tax increase is set to hit small businesses the hardest. Whist trying to survive in an already crippling financial market, small businesses will also have to find the finance to cover this new tax increase, or forfeit recruitment.

The Government's plans have sparked outrage amongst business groups such as the British Chamber of Commerce, the Confederation of British Industry, the Retail Consortium, the Federation of Small Businesses and the Institute of Directors. These major groups are strongly opposing the increase, jointly protesting against it as they fear it could lead to job cuts and reduced recruitment and business growth.

These groups see this new plan as a 'tax on jobs' which ultimately can jeopardise the upturn in the labour market and deter businesses from employing new staff. They feel that other, more favourable measures have been overlooked by the Chancellor, such as freezing Corporation Tax for small firms for example.

What does this mean for Small Businesses?

Because of growing overheads for small businesses, it is claimed by the FSB that over 57,000 jobs in small businesses could potentially be lost. It is also thought that 12% of employers are considering recruiting less staff, and 8% propose they will need to cut jobs, according to the Chartered Institute of Personnel and Development.

What can be done?

John Wright, the National Chairman for the FSB believes that small businesses can play an important part in helping to overturn the NICs rise by signing a petition which calls for the Government to take more notice of the support small businesses need during such difficult times. Access the petition here..

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