A fifth of hospitality staff to enter new employer NICs threshold
Over 1.2 million hospitality staff are not eligible for employer NICs currently, but that is set to change in April when that number will be cut to just over 450,000, UKH stated
More than 774,000 hospitality workers, representing a fifth of the industry’s workforce, are set to enter into the new employer NICs threshold for the first time, according to new analysis from UKH.
The trade body warns that the changes to employer National Insurance Contributions will hit hospitality hardest due to the high number of employees working part-time or flexible hours.
Over 1.2 million hospitality staff are not eligible for employer NICs currently, but that is set to change in April when that number will be cut to just over 450,000, UKH stated.
With more than 774,000 workers due to be newly-eligible for employer NICs, the trade body fears that it will cost the sector £1bn.
Combined with £2.4bn of other costs hitting in April, businesses are already taking hard decisions to cut investment, freeze recruitment, cut jobs, reduce hours or increase prices.
As a result, UKH is calling on the government to implement a delay to these changes, to allow it to “pursue measures that won’t endanger businesses and jobs”.
Alternatives have been put forward to the government, in the form of a new rate of employer NICs at 5%, rather than 15%, for earnings between £5k and £9,100, or a lower rate for lower-earning taxpayers who work part-time.
The trade body believes that both solutions would ensure lower earners aren’t hit the hardest.
Kate Nicholls, chief executive of UKH, said: “The change to employer NICs is one of the most regressive tax changes ever. The scale of this change is unprecedented, bringing three-quarters of a million people into this employer tax for the first time, and the extent of the impact will be enormous.
“This tax is already forcing businesses to abandon investment, change recruitment plans, reduce headcounts and increase prices to cope with these cost increases. At a time when we saw hospitality as the biggest driver of economic growth in November, it’s completely misguided to be punishing a sector that has such growth potential.”
She added: “I hope the government can see the devastating impact this will have on businesses, team members and communities, and pause these changes to pursue alternative measures, in partnership with business.”
