The UK’s hospitality sector is bracing for one of the most regressive tax changes yet, as over three-quarters of a million employees become eligible for employer National Insurance Contributions this April. The move is set to cost the industry £1bn annually, threatening investment, jobs, and price stability, according to UKHospitality, which is urging the Government to reconsider.
One fifth of the UK’s hospitality workforce will be included in the new employer NICs threshold for the first time, according to the industry trade association.
The changes to employer National Insurance Contributions (NICs) will hit hospitality hardest, due to the high number of employees working part-time or flexibly.
According to UKHospitality, more than 1.2 million staff in the sector are not currently eligible for employer NICs. However, this figure is set to fall to just over 450,000 people in April, while more than 774,000 workers will be newly eligible for employer NICs. It’s estimated the change will cost the hospitality sector £1bn.
“The change to employer NICs is one of the most regressive tax changes ever,” said Kate Nicholls, CEO of UKHospitality “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.
“This tax is already forcing businesses to abandon investment, change recruitment plans, reduce headcounts and increase prices to cope with these cost increases.
UKHospitality is calling on the Government to delay the changes and has made alternative policy proposals including a new rate of employer NICs at five percent for earnings between £5,000 and £9,100 or a lower rate for lower-earning taxpayers who work part-time.
“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,” she continued.
“I hope the Government can see the devastating impact this will have on businesses, team members and communities, and pause these changes to pursue alternative measures, in partnership with business,” Nicholls concluded.
