Businesses are being urged to take note of the Government’s plans to increase employers’ National Insurance Contributions by an extra 0.5 per cent in April 2011.
At the end of last year, Chancellor Alistair Darling revealed plans to increase the Contributions in an effort to bring £3 billion into the Treasury. This increase comes on top of the 0.5 per cent already announced in last year’s budget statement, bringing the total rate to 12 per cent.
According to Bibby Financial Services, the increase will force many small businesses to rethink hiring new staff potentially stunting growth. Edward Rimmer, chief executive of the financial services firm says that the rise has come as ‘a nasty surprise to small businesses across the UK’.
‘Looking forward, increasing a tax damaging to businesses, such as National Insurance Contributions, is likely to have a detrimental effect on the economy and cause a potential dip in business, as the cost of employing somebody will increase by one per cent, making firms more reluctant to take on new staff,’ he said.
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