spring statement march 2022

More cash in pockets of sector staff as NI threshold raised by £3k

By Gary Lloyd

- Last updated on GMT

Money matters: although the national insurance contribution threshold was raised, trade bodies were disappointed with Sunak’s speech (credit: Getty/Zedelle)
Money matters: although the national insurance contribution threshold was raised, trade bodies were disappointed with Sunak’s speech (credit: Getty/Zedelle)

Related tags Legislation Finance Social responsibility Pubco + head office

Chancellor Rishi Sunak has increased the threshold before workers start paying national insurance contributions by £3,000 in Wednesday’s Spring Statement meaning staff in the sector will keep more of the money they have earned.

However, there was no mention of an expected hike in national insurance contributions that was widely reported to rise from 12% to 13.25% from April this year, which would conversely mean pub employees would have to fork out more money to the Government once they pass the new threshold.

The move to increase the threshold means all workers who have previously been allowed to earn £9,568 before paying anything toward national insurance costs on their wages will now be allowed to earn £12,570 before doing so. The move has brought the national insurance threshold in line with the personal allowance for income tax.

£6bn cut for 30m people 

Sunak said: “From July, people will be able to earn £12,570 a year without paying a single penny in income tax or national insurance – that is a £6bn personal tax cut for 30m people across the UK; a tax cut for employees worth £330 per year; the largest increase in a basic rate threshold ever and largest single personal tax cut in a decade.”

National insurance payments are deducted from wages before workers are given their net pay that fund services including the NHS, social care, as well as maternity, sick and bereavement pay, and the state pension.

Other news Sunak delivered included a drop in the personal income tax rate of 20% to 19% that will come into effect from 2024.

He also introduced a drop in fuel duty of 5p per litre that will come into effect as of Wednesday evening at 6pm. Sunak said it was “the biggest cut to all fuel duties ever and will be in place until March next year”.

However, the Night Time Industries Association (NTIA) said was “extremely disappointing” with Sunak’s speech. Chief executive Michael Kill expressed a lack of empathy for businesses in the sector. He said: “We called on the chancellor, before the Spring Statement, to produce a package that included an extension of VAT and business rates reliefs, a cancellation of the proposed NI hike, and action on businesses energy bills and fuel duty, to allow the sector financial headroom to survive in something resembling its pre-pandemic form. It is very disappointing that today he took none of these steps.”

Nowhere near enough

The British Institute of Innkeeping (BII) was also “hugely disappointed” with the chancellor’s Spring Statement.

It said while the increased boundaries for national insurance contributions will help workers in the sector and consumers alike, the measures are nowhere near enough to ensure the future growth that pubs will need to begin their recovery in earnest. And that as VAT is set to go back up to 20% next month, significant price rises across the board are now inevitable to counter inflationary costs for pub businesses.

BII chief executive Steve Alton said: “While the Chancellor has implemented a number of measures that undoubtedly will reduce the pressure slightly on cash-strapped consumers, the reality for our members is that they have to significantly grow revenues against pre-pandemic figures to even stand still.”

British Beer & Pub Association chief executive Emma McClarkin expressed overall disappointment with the statement but was pleased with the national insurance threshold raise. She said: “We welcome the chancellor’s announcement today to increase the employment allowance, the threshold for national insurance contributions, the planned increase in the income tax threshold and the fuel duty cut. However, the fact remains that these will do little to help the bottom line for thousands of pubs and brewers around the country struggling with increasing overheads and concerned consumers.”

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