How the increase in National Insurance will cripple small businesses
The Prime Minister has announced a new health and social care tax that will begin with a 1.25% rise in National Insurance for employees and employers from April 2022. The £12bn tax rise will go towards the NHS backlog and reforms to the care sector.
But, for small businesses emerging from lockdown, this sudden increase presents a potential tipping point. After 18 months of lost earnings, staff shortages, and the ‘Pingdemic’ (frequent closures caused by the NHS Track and Trace app), this back-turn on the Conservative manifesto is yet another blow.
The biggest impact of the National Insurance rise will be the fact it makes employing staff more expensive. For one staff member on the living wage, outside of London, employers will be charged an additional £241.87. The devastating impact of lockdown has already cost small businesses £126.6bn, with 81% of UK SMEs saying that the government’s financial support packages have not been enough.
Many UK businesses are already deeming the NI increase a tax on jobs, a blow to economic recovery, and an unforgivable ignorance of the damage from the pandemic, rather than a means of economic restoration. Following the upheaval of the last two years, companies have seen more redundancies, wage reductions, and bankruptcy than ever.
Emma Pinfold, founder and CEO of Bond Street to Your Street, a small business selling pre-loved designer bags and clothing, has been using her company to fight the effect of ‘fast fashion’ on climate change. The fashion industry accounts for 8% of the world’s greenhouse gas emissions, a figure which could rise by 49% by 2030 (Quantis).
Small businesses like Emma’s are fighting to repair our country and our future after the economical damage suffered during the pandemic. This NI increase threatens the survival of these businesses, putting not just small businesses, but the economy and the climate at risk.