The claim comes from new analysis by UKHospitality (UKH) with the trade body stating the move will see a fifth of hospitality’s workforce “dragged into the new employer NICs threshold for the first time”.
UKH added the “regressive changes” to employer NICs will “hit hospitality hardest”, due to the high number of employees working part-time or flexibly in the category.
Currently, more than 1.2m hospitality staff are not eligible for employer NICs but come April 2025, that number will be axed to just over 450,000 people – resulting in more than 774,000 workers who will be newly eligible for employer NICs.
Hard decisions
Combined with £2.4bn of other costs hitting in April, businesses are already taking hard decisions to cut investment, freeze recruitment, cut jobs, reduce hours or increase prices.
UKHospitality is calling on the Government to implement a delay to these changes, to allow the Government to pursue measures that won’t endanger businesses and jobs.
Alternatives have been put forward to the Government, in the form of a new rate of employer NICs at 5%, rather than 15%, for earnings between £5,000 and £9,100, or a lower rate for lower-earning taxpayers who work part-time. Both solutions would ensure lower earners aren’t hit the hardest.
UKHospitality CEO Kate Nicholls said: “The change to employer NICs is one of the most regressive tax changes ever.
Completely misguided
“The scale of this change is unprecedented, bringing three quarters of a million people into this employer tax for the first time, and the extent of the impact will be enormous.
“This tax is already forcing businesses to abandon investment, change recruitment plans, reduce headcounts and increase prices to cope with these cost increases.
“At a time when we saw hospitality as the biggest driver of economic growth in November, it’s completely misguided to be punishing a sector that has such growth potential.
“I hope the Government can see the devastating impact this will have on businesses, team members and communities, and pause these changes to pursue alternative measures, in partnership with business.”
