National Insurance Hike

ended 24. January 2022

The Government is under growing pressure to bump back the National Insurance rate hikes in April, with David Davis among the latest to say the tax increase will put too much strain on the economy. With inflation and energy prices soaring, interest rates on the up and many people and businesses saddled with debt, one quick question:

  • Should the NI rate hike be postponed or scrapped altogether?

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17 responses from the Newspage community

Of course the government should scrap the proposed tax rise, talk about adding insult to injury; when inflation is through the roof, costs are rising, and real wages are down, taking money out of the pockets of ordinary hard-working Brits is vandalism! The wealth of UK billionaires is up during the pandemic by £106bn. Let's put that in context; If you earned £1 a second 24 hours a day, (£86,400 per day) 365 days a year and paid no tax at all, it would take over 3361 years to accumulate not their wealth but their increase in wealth during the biggest squeeze in living standards for over 30 years. Now, who do you suppose we tax?
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"The proposed tax increase is bad for individuals and bad for business. As a start-up, it's expensive and risky taking on new employees and this makes it cost even more. I support paying tax where we get value as taxpayers or the government is providing essential services. But this money sounds like it is going to disappear into a black hole. Especially when we hear that this money will in fact go to the NHS (not social care) who are hiring no less than 42 new CEOs on £270k plus salaries per year."
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"The idea of a National Insurance rate increase shouldn't just be postponed, it should be put in the bin and incinerated. I understand there's a need to recoup the billions spent on the pandemic, but seriously, open your eyes and read the room. Now is not the time. The last thing we need right now is for more businesses to collapse, creating an unemployment crisis. With the cost of inflation, the hike in energy prices, interest rate increases, and the cost of living higher than ever, so many employers and small businesses are barely hanging in there. Saddle them with this too and it could be curtains for them and their employees."
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"It should be scrapped altogether. It is wrong that over 600k contractors who work through umbrella companies will end up paying both the employer's and employees' NI contributions out of their own pockets. In addition, this stealth tax is unaffordable for small businesses, many of whom are on the brink and this will push them over the edge. Our economy is in a fragile state, and we simply can't risk it by adding a tax that no-one voted for, that no-one can afford, and that breached the Conservative Party's own manifesto pledge. It's theft, pure and simple."
"It is ludicrous that NI tax is due to be increased for employers and employees in April. Small businesses have only just started repaying covid debts and households are seeing soaring prices. When the increase was announced in September last year we didn't have Omicron or record-breaking inflation. With that in mind, the government should delay it and just admit circumstances have changed."
"The Government are rightly under huge pressure to postpone the planned National Insurance hike. We have seen the cost of living crisis play out in the country, made worse by the huge increases in energy costs as well as inflation as a whole. We already have the highest tax burden since the end of WW2, so this is not the time to hike it further."
It's an opportunity to give businesses a welcome relief by pushing back the planned NI rate hikes. Whilst we all accept the government has borrowing to fund we didn't all benefit from handouts/relief during the pandemic nor are we relying on them now. We are more than paying our way but these rises, along with the avalanche of other cost increases we are facing have a real impact on SME's and I'm sure the cost of us going out of business far outweigh the additional income to the purse from the raise. I implore the Government to do the right thing on this occasion and push this back at the very least whilst we adjust to other pressures in the short term.
Now is the perfect time to give every business some relief by scrapping the national insurance hike and allowing people adapt to the rising costs of living with inflation out of control the last thing we need is people taking home less money.
Millions of UK freelancers could be the biggest losers in any tax grab. On top of a NI hike, they are already contending with a spree of added tax hikes and mechanisms, such as IR35, which has pushed a third of freelancers into unregulated payroll umbrella companies. There have been reports that unscrupulous umbrella companies could be costing workers and the exchequer as much as £4.5bn a year. Go after them, not law-abiding citizens. On top of that, many UK companies are now outsourcing jobs overseas because of IR35. Again, lost tax revenues. The Chancellor’s actions so far are arguably and inadvertently instigating the death knell for the country’s startup founders and freelancers alongside a spree of solvent businesses closing up shop.
The NI increase is as welcome as a BYO invite from Boris to a garden party at Number 10. As a small business owner, I simply want the financial pain and uncertainty to end. It’s like being told as a kid on a miserable walk ‘you’re almost there’ before seeing yet another hill to climb. Employers and employees cannot be burdened with the extra sting particularly whilst this fragile economy attempts its recovery post-covid.
Generally speaking, modern civilisations tick along pretty well because everyone knows what the rules are, the majority of people follow them and people know the consequences of not following them. These same principles are also observed within mammalian groups too! Lately though it seems our very own silverbacks haven't necessarily been following the rules put in place for the whole tribe! Riots and civil unrest are usually preceded by people feeling that rules have not been followed and / or groups have been treated unfairly. Knowing what we know about recent rule breaking, it might well be that a new taxation system provokes widespread demonstrated acts of public dissatisfaction. It might therefore be wise to allow the dust to settle on the recent furore and for the whole of society to follow the same, predictable rules for a bit before introducing new ones which will likely cut close to the bone because it affects people's finances.
Dealing with the NI rate rise in isolation is like putting a sticky plaster on one part of a large wound whilst leaving the rest to fester. NI rises are just a small part of an increasingly bigger problem which is the burden of increased taxes on small businesses who have not had time to recover (or breathe) before being hit with yet more increases over the last 2 years. Scrap it, and charge the government (if they can get their heads out of their own proverbials for long enough ) with spending the time and resources reviewing, and more importantly addressing the the bigger picture of tax responsibilities and where they should be apportioned.,
Tax rises are always contentious but to plough ahead with one when many businesses are still trying to recover from the pandemic, and many people are struggling to put food on the table would be reckless. Moreover, with interests rates still low, I think the public purse can withstand the National Insurance increase being delayed for a while, even if it does lead to an increase in public borrowing.
April's National Insurance hike should be postponed in my opinion. For starters, it breaks a Conservative 2019 election manifesto commitment not to increase taxes. Given recent events though, that's hardly a surprise. It's also highly regressive. Higher earners over £50k pay far less NI as a proportion of their income. On top of the huge surge in energy costs expected the same month, and the crippling fuel and food prices already with us, millions of people simply can't afford it. Time for a rethink Rishi.
Raising NI just makes no sense when companies are struggling to pay Bounce Back loans are being hit with rising pay claims, Intrest rates, and supplies raising their prices. No one wants inflation to return but it looks inevitable with so many rises in business costs
Whilst logically, we can't spend what we don't have, this tax hike is a simplistic approach, leaving both the financial and adminstrative burden on individuals and SME businesses. The waste that most government big-headline and vanity projects result in is obviously too difficult to reduce, so it's easier to target those without a strong enough voice. About time the political class got its act together and gives proper support and encouragement to our SMEs instead of viewing us and the public as political savings accounts and instead help us to become cash generators. Abandon this tax hike and find someone with a good business head to find a less self-destructive approach.
An increase in taxes means lower take-home pay for employees, but the big question is how this tax hike may impact the labor market. A National Insurance hike of 1.25% means that annual NI taxes for the median full-time UK employee, who earns £31,772 a year, will rise from £2,664 to £2,941. Right now, thousands of UK employees are on the move, quitting voluntarily and reassessing their careers. Time will tell, but we could see more UK workers staying in their jobs for financial stability, or we may see more workers looking for higher-paying jobs to potentially offset the pay they'll no longer be receiving. For employers, it may be a signal that now is the time to offer higher salaries to help recruit them with more pay, since less will be going into workers' pockets.