Government plans to cancel the national insurance rise for UK employers have been hailed by the business community.
Quentin Pain, founder and chairman of accounting software company Accountz, called the move to cancel the 1p rise to employer contributions planned by Labour “a great move for businesses and business owners.”
Abandoning the National Insurance rise is a policy that will be heavily supported by the SME sector
Quentin Pain, founder of Accountz
He adds: “Abandoning the National Insurance rise is a policy that will be heavily supported by the SME sector.
“Instead of slashing budgets, putting jobs at risk and prohibiting companies to invest more in recruitment, businesses of all sizes will now be in a better position to free up budgets, recruit new staff and grow and expand as a result.”
Based on a company of 20 employees with an average wage bill of over £27,000 per person, a 0.5% increase in annual NI contributions would see these payments rise by approximately £2,000.
With current employer contributions at 12.8%, existing NI contributions by a company of this size would be £56,000. If the NI increase to 13.3% was in place this would jump to more than £58,000.
Pain says that by preserving the 1p rise in employee contributions, the Government is still adding to the administrative burden of businesses: “Despite the fact that the employer contribution increase has gone the employee contribution remains. For small businesses this will still mean altering PAYE returns for all employees.
“For small business owners the challenge therefore still remains of how to efficiently and painlessly alter employee national insurance contributions.”
He adds: “Small firms in the UK generate an astonishing 37% of the country’s annual turnover. It is vital the new government props up this sector by avoiding potentially catastrophic taxes, which could harm progress and stunt growth in this key area and in turn have a knock-on affect on the economy as a whole.”
