NICs rise will force businesses to close, warn hospitality bosses

Top pub and restaurant bosses have warned the chancellor that tax rises in last month's Budget will "unquestionably" cause closures and job losses.

In a letter, more than 200 signatories have said the hospitality industry is disproportionately impacted by an "unsustainable" hike in the amount employers pay in National Insurance contributions (NICs).

It adds that businesses have "no capacity to pass the costs onto customers", which would instead lead to job cuts and closures of smaller firms.

Chancellor Rachel Reeves has said that her National Insurance changes for businesses will generate £25bn, which would aid funding of public services, such as the NHS.

From April, the rate employers pay in National Insurance will rise from 13.8% to 15%, and the threshold at which they start paying the tax on each employee's salary will be reduced from £9,100 per year to £5,000.

Signatories of the letter include Kate Nicholls, chief executive of UKHospitality, the bosses of pub firms Fuller's and Stonegate Group, and Premier Inn's owner, Whitbread.

They are supported by a further 209 businesses, together employing tens of thousands of people across the UK.

According to the letter, the cost increases will cause jobs to be "drastically" cut and hours to be reduced for workers.

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Read the letter in FULL

Hospitality is disproportionately affected by the changes to employer National Insurance Contributions (NICs). The lowering of the threshold at which employer NICs is paid to £5,000 will bring in thousands of part-time staff that were previously never affected, disproportionately affecting hospitality.

The signatories have put forward to the Government two measures to mitigate this impact:

1. Create a new employer NICs band from £5,000 to £9,100 with a lower rate of 5%; or

2. Implement an exemption for lower band taxpayers working fewer than 20 hours per week, targeting support for part-time and lower paid workers.