The hospitality sector asks for a delay in NI due to a PS1bn cost

The hospitality industry has called on the government to defer plans to increase employer’s national insurance contributions (NICs).

UKHospitality’s new study found that 774,000 workers, or one fifth of the total workforce in the hospitality sector, will be subject to the new employer NICs under the proposals of the chancellor. This could result in an extra cost of PS1bn.

The hospitality industry, which includes thousands of restaurants, hotels, cafes, nightclubs and pubs, is the one that will be most affected by the “regressive” changes, as a large proportion of its employees work part-time.

The report says that the cost increase is due to the fact that the number of employees in the sector who are not eligible for employer’s NICs, will fall from 1.2mn in April to just under 450,000.

UKHospitality warns that employers have already taken steps to reduce jobs, investment and prices.

The group urges the government to consider alternatives that will not “endanger jobs and businesses” and delay or change the proposed changes.

The new rate of 5% for employer NICs instead of the 15% rate would apply to earnings between PS5,000-PS9,100. Or, a lower rate could be applied for lower-earning part-time taxpayers. Both options are believed to protect lower-earners.

Kate Nicholls said, “The change in employer NICs was one of the most regressive changes to tax ever.” This change will affect three quarters of a millions people for the first-time, with a huge impact.

She said that the tax had already forced organisations to rethink their investment and recruitment plans. They also reduced headcounts, and increased prices to cover the extra costs.

Nicholls added, “I hope that the government will see the impact of these changes on business, team members, and communities and stop them to pursue other measures in partnership with the business.”

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