National Insurance Increase – BBC Radio Wales
Elissa Thursfield appeared this morning on BBC Radio Wales with Claire Summers. Listen back to their conversations about today’s increase in Nation Insurance contributions.
BBC Radio Wales
National Insurance contributions are going up today for millions of people across the UK.
Anyone earning more than £9,880 will pay 1.25p more per £1.
Employers will also be paying extra contributions for their staff.
If you are self employed, you will be paying more on your profits.
From July the threshold of when you start paying tax will increase to £12,570, therefore in July anyone earning less than around £34,000 will be paying less NI than they were a year ago.
This money will be going to health and social care in England, experts are predicting the increase will be around £11bn.
Opponents are saying it will just put more pressure on the cost of living.
Claire – We are all feeling the squeeze right now with all costs going up.
Elissa – What it means is the cost of employing somebody is going to rise. Businesses are up against it at the minute anyway with a battle to attract the right kind of talent. Wages have gone up with the national minimum wage and on top of that now we have this increase.
Claire – What might the impact be on smaller businesses?
Elissa – For smaller businesses particularly those whose cash flow has had a bit of a squeeze or those who are reliant on raw materials or whether cost of sales has gone up due to cost of living or the cost of sourcing has gone up. This is going to be an additional squeeze on their business and it could mean they can’t afford to employ as many staff as they have been or they will have to stop recruiting.
Claire – So it could lead to redundancy in some cases? Could it mean some businesses may have to close?
Elissa – Potentially yes! This could be the tipping point for many businesses where they have skated through the pandemic, they have managed to stay open. The government support has now stopped and now everything is now rising. Utility costs have rocketed. The day to day costs of running a business have risen, the money they have to bring in before the business owners can even take home £1 have gone up significantly so I do think we will see some smaller businesses closing.
Claire – Could it stifle jobs?
Elissa – Yes! With this candidates market at the moment and the battle for talent at the moment where candidates pick and choose where they work. We may see that situation change if there are less businesses around or less people willing to recruit due to the cost of employing people.
Claire – And if you are a business listening to us today, what support is there? What is the advice? What do you think small businesses will need to have to cope with this increase?
Elissa – It’s very easy for smaller businesses to feel isolated so my suggestion would be to
- look out for local free networking groups
- become a member of the federation of small businesses
- chat to your peers
- there is lots of free advice out there, look at what other people are doing and this will help you feel less alone.
- if you don’t have an internal HR or legal department then you can outsource those options and it tends to end up cheaper and more efficient, particularly if you are going to need to make redundancies, you don’t want to do a P&O and get it wrong, make sure you take advice so it doesn’t end up costing you more in the long run
