Bath firms ‘facing £4.6m bombshell’ after tax hike

Bath’s small and medium-sized businesses, from tech start-ups to hairdressers and cafes, will pay an extra £4.6 million a year due to the rise in National Insurance, research commissioned by the Liberal Democrats has found.

Prime Minister Boris Johnson broke his 2019 manifesto promise by raising employer National Insurance contributions by 1.25 per cent, impacting small businesses in Bath and across the country.

House of Commons Library research has detailed the impact of the tax rises, and it is estimated that the average micro-business employing up to nine people will pay more than £1,000 extra a year as a result of the tax hike, say the Liberal Democrats.

The party says that in Bath, this means that for all businesses with less than 250 employees, there will be a total extra £4.6 million National Insurance rise annually once the tax hikes come into effect next year.

The Liberal Democrats are calling for small businesses to be offered a lifeline by slashing their employer’s National Insurance contributions instead of raising them.

Under the party’s proposals, the Employment Allowance would be quadrupled from £4,000 to £16,000 for at least two years, meaning taxes on small businesses would be slashed by £5.5 billion across the country next year.

Wera Hobhouse, Liberal Democrat MP for Bath, said: “The Government’s broken manifesto promise will create a £4.6m tax bombshell for small and mediumsized businesses in our community.

“Many of these businesses have been hit hard by the pandemic and our high streets have been struggling for years. The last thing businesses in Bath need right now are damaging tax rises.

“Local businesses have contacted my office about the increased costs they are facing. I’m calling for a tax cut for local entrepreneurs and business owners, to help them create jobs and drive our economic recovery.

“Bath’s unique small and medium-sized businesses add so much to our city.

“We have already lost far too many treasured shops from our high streets, and too many businesses are drowning in tax rises and red tape.

“Rishi Sunak must give small businesses the chance to grow again instead of clobbering them with a crippling tax rise.

“The Chancellor is out of touch with small businesses and if he truly cared about their survival, he would cancel this tax hike immediately.”

Many of these businesses have been hit hard by the pandemic and our high streets have been struggling for years. The last thing businesses in Bath need right now are damaging tax rises. Bath MP Wera Hobhouse