Employer NIC contributions will rise next year to fund health and social care spending

14th September 2021

Employer National Insurance Contributions will rise by 1.25% to 15.05% next April to boost health and social care funding. National insurance rates for employees and the self-employed will also rise. The NIC rate increase will only be for one year, after which it will revert to its current level and be replaced by a new, hypothecated health and social care levy.

Responding to the plan, Alan Mitchell from Fife Chamber of Commerce, said: “Even if it is necessary for business to pay more tax to increase NHS treatment capacity and fund social care, it is legitimate to ask whether increases should be imposed as early as next April when many businesses will still be in the very early stage of recovering from the financial damage caused by covid lockdowns. Even more baffling is the decision to secure extra money from business by increasing its national insurance contributions.

“NIC is often called “a tax on jobs”, and with good reason. Higher NIC could be a disincentive to employing additional staff. That won’t just impact business efficiency and productivity, it could worsen health and social care outcomes in the future. Getting people into stable, secure employment and keeping them there is the route to better health and wellbeing and the best way to allow people to save and make provision for their future.

“The Scottish Government has been vocal in its criticism of the plan and it can, of course, take steps to mitigate its impact by diverting funds from elsewhere in its budget to give more financial support to companies in the form of lower business rates or training or employment grants. This will be a good test of its commitment to business and the economy.”

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