The changes to employer national insurance contributions (NICs) will see more than 774,000 workers newly eligible for the contributions. This figure represents almost 63% of workers who were previously ineligible. UKHospitality predicts this could cost the hospitality sector up to £1bn.
The two-fold changes involve the lowering of the threshold of employer NICs from employees earning £9,100 to £5,000 per year, as well as an increase in the rate at which this contribution is paid from 13.8% to 15%.
The changes, which are due to be implemented from 6 April of this year, are of particular concern to the hospitality sector due to the high number of workers who are within the £5,000 to £9,100 income strata. Many within the trade work part-time or flexibly.
Kate Nicholls, chief executive of UKHospitality, is clear in her criticism of the policy changes: “The scale of this change is unprecedented, bringing three-quarters of a million people into this employer tax for the first time, and the extent of the impact will be enormous.
“This tax is already forcing businesses to abandon investment, change recruitment plans, reduce headcounts and increase prices to cope with these cost increases.
“I hope the government can see the devastating impact this will have on businesses, team members and communities, and pause these changes to pursue alternative measures, in partnership with business,” she said.
UKHospitality has suggested implementing a delay to this policy change and support alternative policy arrangements that have been put forward including a 5% instead of a 15% rate of employer NICs for those earning between £5,000 and £9,100.