The Forum of Private Business has welcomed the new coalition government’s decision to scrap the planned 1% hike in employers’ national
insurance. The ‘tax on jobs’ had been scheduled to start in 2011 – at the time when the organisation said many analysts had been anticipating small businesses would be seeking to recruit in earnest in order
to meet renewed demand.
It added that, allthough the 1% employers’ NI rise remains for staff earning more than £20,800, the threshold at which they begin paying NI on employees earning up to that figure will increase by £21 per week – meaning most will be spared a major tax increase in return for retaining staff and taking on new employees.
"Small businesses did not want this tax on jobs because clearly it would have been a major barrier to staff retention and job creation and would have hindered economic recovery," said the Forum’s chief executive Phil Orford.
"For the majority of employers it would have proved to be an unpopular and unworkable tax rise. Although not perfect, the new coalition government’s policy on NI is far better and provides a degree of certainty for business growth now and in the future."