Press Room
National insurance increase may hinder economic growth
The measures announced in today's Pre Budget Report to guarantee
work for the young unemployed are welcome, but this must be
compared with the increases in National Insurance which means that
the cost of employment will increase, warns leading business and
financial advisers Grant Thornton.
Ellie Gamble, Senior Tax Manager at Grant Thornton comments, "At
a time when encouraging employment is one of the Government's
stated aims it seems curious that they have chosen to increase the
cost of taking someone on and increased the costs of existing
employees. This increase may well affect employers' hiring
decisions.
"Employers had already been warned that from 2011, the rate of
employer's National Insurance would go up from 12.8% to 13.3%.
Today's announcement that there will be a further increase to 13.8%
could impact upon hiring decisions at a time when any economic
recovery is going to be hugely affected by employment
statistics.
"It is disappointing that the Government did not take this
opportunity to think more creatively about the options available,
which could have included a rebate or holiday for national
insurance contributions when a job was offered to bring someone
back into the workforce.
"Most of the National Insurance taken by the taxman comes in via
employers who act as unpaid collectors for their own share, and for
that of their employees," says Gamble.
For further information please contact:
Marielle Legair, Grant Thornton Press Office, 0207 728 2183