National Insurance changes could make things harder for Northamptonshire businesses
Rachel Reeves confirmed yesterday in the budget that the tax will increase up by 1.2% in April, whilst the threshold is also lowered.
There's warnings that the rise to employers national insurance could make it harder for small businesses to employ people and create jobs in Northamptonshire.
Yesterday (Wednesday 30 October) Rachel Reeves, the first female Chancellor, set out the planned taxes and spending in the first Labour Budget in 14 years.
Ms Reeves is promising the £40-billion tax-rising Budget will deliver growth.
Rachel Reeves confirmed yesterday in the budget that the tax will increase up by 1.2% in April, whilst the threshold is also lowered.
Jennifer Thomas is spokesperson from Northamptonshire's Federation of Small Businesses.
She tells us what the impact could be:
"Anything which makes it difficult for a small business owner to hire people, which squeezes their costs, which makes it more difficult for them to invest, is going to cause problems."
Despite Labour's promises to protect "working people", a £25.7 billion increase in national insurance contributions paid by employers is likely to reduce wages and lead to job losses.
Ms Reeves plans to pour more public cash into schools, hospitals, transport and housing, and will change the way government debt is measured to allow her greater borrowing flexibility.
Fiscal watchdog the Office for Budget Responsibility (OBR) has however predicted the measures will be unlikely to lead to the longer term boost in economic growth the Government wants to see.
And influential economics think tank the Institute for Fiscal Studies (IFS) has said she may need to raise taxes again in future if her "gambles" on spending do not result in growth.
Jennifer says it could effect businesses of different sizes:
"Whether you are one of the smallest businesses or whether you have a lot of employees your biggest cost in your business is your employees, but you need them if you're to grow and contribute to your community."
What else has been promised in the Budget?
- Fuel duty frozen
- Duty on draft alcohol is cut, but other alcohol tax will rise by RPI
- No increase in National Insurance rates for workers.
- VAT, and income tax rates frozen
- Employer's National Insurance contributions raised
- National minimum wage increases to £12.21
- Nearly £14 billion put aside for compensating victims of the post office scandal and the infected blood scandal
- Inheritance tax thresholds frozen
- Capital gains tax increasing
- Budget for schools goes up by £2.3bn, with an extra £1bn for SEND
- Air passenger duty going up by 50% for private jets
- VAT introduced on public school fees
- Tobacco duty raised
- £22.6bn for the NHS's day-to-day budget