Small business owners face increased National Insurance contributions

Retailers are torn on the issue of a new 'health and social care levy' to be shouldered by small businesses

National Insurance contributions NI

Small business owners and employees could be set pay an extra 1% on national insurance (NI) contributions due to the growing social care problem.

At the moment, employers pay 13.8% for their NI, with employees paying 12% of their earnings.

The move would raise over £10bn a year for the Treasury and has been already dubbed in the media as a new “health and social care levy”.

The government claims the additional money raised would be used to cut NHS waiting times initially, which currently sit at 5.3m patients, with money then being used to cap care costs at £50,000.

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If implemented, the policy is likely to generate controversy, as increasing NI contribution would only affect people of working age, rather than the already retired.

National chairman of the federation of small businesses, Mike Cherry, said the decision to increase NI is “astonishing” considering the huge amount of damage small businesses have suffered during the coronavirus lockdown and ongoing pandemic.

Cherry said: “The government cannot be serious about a strong economic recovery if it thinks hiking the jobs tax is a good idea… it is astonishing that just 24 hours after many businesses were able to re-open, ministers think now is a good time to land small firms with this bombshell.”

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Alan Mannings, Shop on the Green, Chartham, said: “As long as the money raised goes towards social care and is ringfenced for the purpose, then I think this is a good move.”

Ketul Desai, The General Store in Tufnell Park, London, agreed social care is an important problem which must be tackled, but went on to say: “It’s tough one. Every year it’s something else we are being asked to pay more for, where it’s NI contributions, the minimum wage, business rates. Now is absolutely the wrong time for retailers, with business rates kicking in soon and the industry yet to recover from the ongoing effects of the pandemic.”

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