West Midlands hospitality trade's extra NIC bill could top £75m, new research shows

Trade body UKHospitality says increases to employer NICs announced in the Autumn statement will hit pubs, restaurants, hotels and cafes hardest, with the sector experiencing a 10% rise in the cost of employment per person as a result of changes to employer National Insurance Contributions (NICs).

In October, chancellor Rachel Reeves announced an increase in employer contributions from 13.8% to 15% and lowered the threshold at which businesses begin paying NICs from £9,100 to £5,000.

A typical hospitality venue situated in the region, which employs more than 40 members of staff earning the average regional wage, will see its annual employer NICs bill increase from £26,000 to more than £48,000 – representing an 85% rise in costs per business, UKHospitality says.

“At the Budget in October, the Government delivered an additional £1 billion in cost to hospitality businesses due to its changes to NICs, putting businesses under unbearable pressure and inevitably hitting lower earners hardest," said Kate Nicholls, Chief Executive of UKHospitality.

“In the West Midlands alone, this will cost cash-strapped hospitality businesses £75 million. For many, it will be simply unsustainable.  

“Pressing ahead with increasing employer NICs is an extremely bitter pill to swallow that is set to have a devastating impact on our sector and communities.

“There needs to be urgent action to mitigate these impacts, otherwise jobs, investment and much-loved local venues will all be at risk.”

In a letter to the Chancellor last month, sector bosses asked for changes to help mitigate the impact. 

More than 200 signatories asked for either the creation of a new employer NICs band from £5,000 to £9,100 with a lower rate of 5%, or the implementation of an exemption for lower band taxpayers working fewer than 20 hours per week.