Three quarters of a million hospitality workers ‘dragged into higher tax regime’ following Budget
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Chancellor Rachel Reeves said at the Budget last year that she will raise employers’ national insurance contributions in a bid to raise £22bn for the Treasury. More than 750,000 low-paid hospitality workers in hotels and restaurants will become part of the national insurance system because of changes made by the Budget, a trade group has warned.
Chancellor Rachel Reeves said at the Budget last year that she will raise employers’ national insurance contributions in a bid to raise £22bn for the Treasury. She also said that she would lower the threshold for paying the tax, from earnings of £9,100 per year to £5,000 per year, meaning hundreds of thousands of people’s employers will now pay the rate.
Kate Nicholls, chief executive of UK Hospitality, said “The change to employer NICs is one of the most regressive tax changes ever. “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.
“At a time when we saw hospitality as the biggest driver of economic growth in November, it’s completely misguided to be punishing a sector that has such growth potential.”. Ms Nicholls warned that this change to national insurance in the Budget could cost the hospitality industry £1billion.
Employers have already warned that they will have to raise prices to deal with the increase outgoings, as well as the planned rise in the minimum wage. Brewer Young’s said last week it will lift its prices by 3.5 per cent following the chancellor’s plan to increase tax on businesses.
