The NI changes are going to cost my organisation £1000 per employee

[flashbac]

The NI changes are going to cost my organisation on average £1000 per employee, The lowering of the threshold alone is going to cost around £600 extra per employee.

We are heavily regulated with fixed income. We're a not for profit. Our customers expectations are increasing. We are now most likely going to have to somehow reduce our headcount now, and payrises for April are going to be off the table.

Just shaking my head really. Our employees don't deserve this. Hard to see how this isn't a tax on jobs.

The lowering of the threshold also means employers have to pay for more workers, because part time salaries are now dragged into it.

A lot of people reading this won't care. All I can say is this NI increase will also affect you. just think about Local authorities, childcare providers and other services. Do you think it won't affect your Councils services/tax bills, to give one example?

(I'm not a Tory bot btw, before anyone starts accusing me of being one. I voted Remain, don't support the Tories at all, can't stand Boris and his cronies.)

Martin Lewis presumably doesn’t understand how employers NI works. Any business employing more than 4 people on minimum wage is worse off following this ‘budget for growth’.

To anyone who has run a business it was entirely foreseeable that increasing employees NI so much on lower salaries would cause problems for the hospitality, care, and many other service industries. But because this government's idea of the hospitality business is free clothes, free tickets and free food for the cabinet it’s hardly surprising they didn’t.

It’s not even that complicated to come up with an approach to employers NI that would have delivered the same about to the treasury as this poorly thought through policy, but be better aligned to the Labour party’s beliefs of those with the broadest shoulders bearing the brunt.

There are 30 million tax payers in round numbers, and each costs their employer £800 more if the £24 billion number is to be believed. A big ‘if’ to be fair.

But there are about 6.5 million higher rate tax payers, and 0.5 million additional rate tax payers. Even if we assume they all earn the bottom of the respective bands (they don’t) of £50k and £125k, and accept a cliff edge for the employer, then increasing employers NI on higher rate tax payers from 13.8% to 20% would cost an employer a little over £3k an employee, and raise £19 billion. Make it 25% on additional rate tax payers using the same cliff edge approach, ie once you go over that the higher rate is applied to all earnings, and you’ve got another 7 billion or so. That gets you £26 billion.

Tweak the numbers and the approach to suit, and I’m sure getting rid of the cliff edge would help but I’m not going to work out the impact of that. But it’s clear to see there was a better way.

At the end of the day, all of the governments money comes from people…it’s just a matter of how it gets there. Directly, by income tax, or indirectly by employment, consumption or corporation taxes. But we as individuals pay for all of them.

Does this affect public sector employees? The national insurance hike I meant. Because if so surely the government will spent more of its own money paying its own employees?

1.5 million in the NHS alone let alone civil servants , teachers etc.

And then it gets it back again.

Yes I suppose it does ..

Maybe I would be completely musts attesting this but wouldn’t making everyone pay just a bit more tax helps things much more ?

Keeping it simple. Im a basic rate tax payer. Let’s say I pay £200 per month income tax.
What if I pay £210 per month ( an extra ten quid a month ) and that money goes towards public services? Most full times working people won’t miss £10 a month and I presume most people won’t minds if it’s spend on public services?

The alternative seems to have been making people pay as least tax as possible but at the same time decimated public services? ..

Small tax increase for working people and leave businesses alone.

I run a small business of 18 employees and I understand that to pay for all the things we need fixing in the U.K., it falls on businesses to pay that difference. We don’t really want to raise prices although we have decided to do a 2% rise because we know our suppliers will.

We normally do an inflation plus 1-2% pay rise yearly but obviously we’ve not done that, we also saved money as we cut the Christmas bonus. We don’t want to, but we figure it’s better to keep employing people on less money rather than give higher bonuses but have to potentially cut jobs later.

We also do have our eyes on two employees to make redundant - they’re not pulling their weight and we could kind of carry them before but this will pushes us into letting them go.

The most annoying thing for us is that we were about to start some investing into a new product, but with these additional costs plus the new legislation about selling into Europe it’s just not worth the risk.

Look, it’s making businesses become as lean as possible, which is potentially better for the remaining employees.

The main thing we have our eye on is the legislation discussion about workers rights. Having just paid out £13,000 in fees to our lawyer on winning a disability discrimination case, NONE of which was recoverable from our former employee who lost, we have basically said we won’t hire any more U.K. based workers unless we have absolutely no other option.

Public sector employers will be reimbursed for the costs, but that won't cover things like GP surgeries or care homes or charities that run public services but are not considered public bodies.

@Ozgirl76 Bummer that you've been caught out at every turn by the new changes, when if your business had been only slightly different at any one of a number of pinch points you wouldn't be feeling it. What rotten luck for you.

Do you mean me @HotTopicsWithImogen ?

Yeah exactly. Care homes is a good point.

The care industry struggles to recruit and retain staff, so making it more expensive to employ workers is surely going to be a negative for them? How will this help a labour shortage?

Sorry, I saw your edit @HotTopicsWithImogen
i don’t see it as bad luck really - just standard running a small business in the U.K. It’s still making a good profit but the sad thing for me is that I wanted to run a business that would be, basically, nice. And all these changes have just made me hard hearted and profit orientated.
One of the workers we may make redundant for example, has a caring role. I loved that we could support that and allow him short notice flexibility to combine work with caring. But now I have to be more hard hearted and accept that all our employees need to be really pulling their weight as the costs have increased so much.

We used to give 2 weeks sick pay but weve knocked that back to 5 days now.

Things like that - it’s a shame for our employees and we’ll continue to do what we can but we’ll be so much more picky about any new staff for example, whereas in the past we’ve taken the risk on the disabled employee or the single mum.

Why can’t the employee who ost pay, I meant their legal team or trade union?

Most union reps for example won’t take on a legal case unless they think their solicitors have a good of winning. The solicitors usually know if there’s a good chance of winning.
So it’s a shame your company won but still paid the costs..

In the employment tribunal it’s extremely rare for a losing party to have a costs order made against them. We tried to settle but she refused so we had to go to trial, where she lost. She represented herself.

You really are most terrifically unlucky. 💐

Not really @HotTopicsWithImogen - this is totally normal for people running small businesses in the U.K. You take the rough with the smooth.

Then you just mitigate for the next time. So we were burned once by the employment tribunal so now we’ve taken steps so that won’t happen again.
The rest of it will happen to all businesses - we all face costs significantly increasing and we’ll all do things to mitigate, like lay people off, increase prices and cut back on employee perks. It’s a shame, life is about to get a lot harder for employees but that’s life these days!

Our business is very different to Ozgirls, because we are industrial. But there will be no new jobs in 2025.

We will not be hiring this year is, I fear, going to be the big message that goes out from smaller companies.

I know MN loves Labour now, but I don't think you will by December 2025. I predict a rush for Reform. I actually quite fancy retirement in Argentina right now, but my Spanish isn't up to the detailed medical conversations I've had to have this week. So that's curtailed the options.

I think you'd find the switch to Argentina to be quite challenging as a business owner, medical conversations aside.

It’s a shame, life is about to get a lot harder for employees

Yeah, they've had it really good up till now. The UK is famed for it. Milk & honey etc.

Well if businesses are going to survive a large increase in costs, they have to do something don’t they? Better to cut costs than go under and everyone lose out.

It all sounds very simplistic to me. But then I'm not a titan of industry.

(and neither are you, you sad fantasist)

At 69, with our working days done and our risks taken, you know (the ones that asked you to put your home on the line at 35 against the money you were borrowing to start a new business), I probably view risk differently to you. IMO, the greatest risk now is political.