National insurance tax will have a detrimental effect on the UK economy

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National insurance tax will have a detrimental effect on the UK economy

This may include advertisements from us and 3 rd parties depending on our understanding. From next spring national insurance tax will rise by 1.25 percentage point to help cover the cost of the NHS backlog and social care crisis. The increase was signed by MPs - last month confirmed and voted on, breaking a manifesto commitment the Tories declared at the last election.

The tax rise will come into force in April 2022 but there are fears that the tax increase will have a detrimental effect on the UK economy and the whole economy. National Insurance is paid for both by employees and businesses and the Institute of Directors IoD fears one in three firms will be stopped from expanding due to the added costs of the tax. A total of 31 percent of over 600 IoD members said they anticipated the higher levy on contributions would result in them employing fewer people in their businesses. Commenting on the findings, IoD Chief Economist Kitty Ussher said: This research is a stark warning to Government of the effects that the national insurance rate rise is likely to have on jobs. READ MORE: State pension age rethink not beyond the realm of possibility If, as they intend, three in 10 businesses decide to employ fewer people as a result of this tax change, the effect will be felt across the economy just at the time that the furlough scheme is ending. Since the March Budget, when the Chancellor announced a future hike in corporate tax, economic bounce back has brought more taxes than expected. Rather than raising the cost of taking on staff through higher employers national insurance contributions, he should be looking to support the companies suffering from skill shortages today. The economic recovery in the UK has already been stalled in recent weeks with figures released by the Office for National Statistics ONS yesterday show that GDP rose 0.4 percent between July and August. While it means the economy is only 0.8 percent smaller than it was before Pandemic, the rate of growth was lower than originally expected. The ONS downwardly revised its estimate for July to a 0.1 percent contraction from the 0.1 percent expansion reported previously. US energy crisis: Fears of return to three day week if gas runs out UPDATE Autumn budget: 5 announcements Rishi Sunak is expected to make? Since January, the UK has experienced the first contract since January as the UK have been plunged into a third lockdown. Growth rebounded strongly in the second quarter, with GDP increasing by 5.5 percent; however, the recovery since then has been slow, with product chain problems and the lorry driver crisis holding back the economy. The national insurance hike passed through the Commons with 317 votes to 248. However, many were worried at the time about the potential impact of the increase despite being overwhelmingly supported by Tory MPs.