There is a call for the Treasury to reconsider the National Insurance contribution (NIC) increase. There was supposed to be a change in this area from next month. However, it is believed it may negatively impact apprenticeship programmes. The NIC rates will increase by 1.25% from April 2022. This is to help pay for the upcoming health-and-social-care levy. This is due to start from April 2023.
FSB wants ministers to stop raising the ‘jobs tax’ to help regain lost apprenticeships. The FSB showed a decrease in apprenticeship starts since 2016/17. This was before the apprenticeship levy was introduced.
The Federation of Small Businesses are looking for a solution to this problem. They put forward a suggestion for the removal of all employer NICs costs for apprentices. Then to cancel the planned increases to NICs and dividend taxation to free up funds for recruitment and training. It also thinks the apprentice payment, should be reinstated after the scheme closed on 31 January 2022. This was worth £3,000 to employers that hired apprentices.
The FSB’s opinion
The chairman at the FSB, said: “By looking at its approach to NICs, the Government can make a real difference. Directly, by bringing down the immediate costs of taking an apprentice on. But also indirectly, by making funds available for recruitment and training. Cash reserves in this area are depleted at the moment. “Small businesses disproportionately hire young people and those from disadvantaged groups when they create apprenticeships. A targeted reintroduction of the hiring incentive that existed over lockdowns makes sense in the context of the levelling-up agenda.”
There are some exemptions do exist for apprenticeships. But the FSB believes that a lot of employers are still paying NICs for apprentices across the UK.
However, the Government has no plans to break its promise. A spokesperson said Chancellor Rishi Sunak is “fully committed” to increase NICs and dividends tax. Despite being written into law, this could still change. This is due to growing concerns over rising energy prices and the cost-of-living crisis faced by many families.
You can read more about the FSBs take on this here on their website. They go into more detail as the voice of small businesses in the UK.
If you would like to talk about this change in more detail, we can help. We can also offer advice on any apprenticeship queries you may have. Please fill out the form below and we will be in touch for a free consultation. Alternatively, you can call the office or your main Jack Ross contact directly.