Business groups have expressed disappointment with the recently announced National Insurance and dividend tax increases, describing the government’s decision as a blow to small businesses and the country’s economic prospects.
On 7 September, Boris Johnson announced that National Insurance contributions for employees and employers will rise by 1.25 percentage points from April 2022 in order to fund health and social care. In addition, the Prime Minister revealed that tax on share dividends will also increase by 1.25 percentage points.
The Federation of Small Businesses (FSB) said the tax hikes mark ‘an anti-jobs, anti-small business, anti-start-up manifesto breach’ and that the move could potentially cause 50,000 more people to be left out of work. The British Chambers of Commerce (BCC) warned the move could derail the UK’s economic recovery.
Reacting to the announcement, BCC Head of Economics, Suren Thiru said, “Businesses strongly oppose a rise in National Insurance contributions as it will be a drag anchor on jobs growth at an absolutely crucial time. Firms have been hammered by 18 months of COVID-related restrictions and have built up huge debt burdens. This rise will impact the wider economic recovery by landing significant costs on firms when they are already facing a raft of new cost pressures.”