FSB chief hits out at NIC rises

National Insurance contribution increases to pay for the Government’s health and social care tax plan, have come under fire from a small business group.

Federation of Small Businesses (FSB) national chair Mike Cherry says the 1.25% increase in NICs for employers and sole traders – alongside a 1.25% increase in dividend taxation – will stifle many firms.

He said: “These hikes will have business owners and sole traders feeling demoralised at a point when they’re trying to recover from the most difficult 18 months of their professional lives.

"For those thinking about starting up, they send completely the wrong message.

“Business owners who have done all they can to retain and support their staff during the pandemic are now being punished for that loyalty with an £11bn increase in NICs, which essentially serve as a jobs tax.”

He added: “This regressive levy hits employers and sole traders without meaningful regard for how their business is performing.

"And will stifle recruitment, investment and efforts to upskill and improve productivity.

“At the same time those running companies, many of whom were left out of pandemic support measures, face a fresh assault on dividend revenue.

“This move marks an antijobs, anti-small business, anti-start up manifesto breach.

The Government should now increase the Employment Allowance to mitigate the damaging impacts of these hikes on the small firms that make up 99% of our business community.”