BUSINESS NEWS


Chancellor Rachel Reeves: ‘Businesses will have to make a choice whether they absorb [the increases] through efficiency and productivity gains, or through lower wage growth’


Firms assess Budget’s ‘exceptional’ tax rises


Rise in employers’ NIC poses ‘job risk’ to lower-paid staff. Ian Taylor reports


Travel businesses will have to cope with a significant rise in staff costs following last week’s Budget. Employers’ national insurance


contributions (NICs) will rise by 1.2 percentage points to 15% from April, while the earnings threshold at which businesses pay NICs will fall from £9,100 to £5,000. This measure alone is forecast to raise £25 billion of the £40 billion a year in additional tax chancellor Rachel Reeves is seeking. This will come alongside a 6.7%


increase in the national living wage, to £12.21 an hour, from April – with


56 7 NOVEMBER 2024


a bigger percentage rise for younger workers. There was some good news,


with 40% business rates relief to be maintained through 2025-26 when it had been planned to remove the relief from April. The Treasury also promised “permanently lower business rates for retail, hospitality and leisure properties from 2026-27”, by increasing rates on bigger businesses including “large distribution warehouses used by online giants”. Reeves suggested: “Businesses will have to make a choice whether


they absorb [the increases] through efficiency and productivity gains, or through lower wage growth.” But the Institute of Fiscal Studies


warned the rise in NICs would increase the risk of job losses among lower-paid staff. Deloitte UK head of tax policy


Amanda Tickel noted Reeves also increased employers’ NICs allowance, meaning “around 200,000 businesses won’t pay anything at all”


Continued on page 54 travelweekly.co.uk


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