Employers' Contributions: Small Businesses
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of the increase in employer National Insurance contributions on (a) hairdressers and (b) other small to medium sized high street businesses that do not qualify for business rates relief.
Answered by Dan Tomlinson
The Government has taken a number of fair and necessary decisions on tax, welfare and spending to fix the public finances and fund public services and one of these decisions, taken at Autumn Budget 2024, was to increase the rate of National Insurance contributions (NICs), whilst reducing the per-employee threshold at which employers start to pay NICs.
Businesses are still able to claim employer NICs reliefs including those for under-21s and under-25 apprentices. This means employers pay no employer NICs for apprentices under 25 or employees under 21 on earnings up to £50,270. These reliefs are estimated to have been worth around £2.5 billion in 2025/26.
We recognise that high street businesses are vital to local economies, supporting jobs and community life, while often facing unique seasonal pressures and workforce challenges. We are driving regeneration through £301m for high streets including High Streets Innovation Partnerships, and £5.8bn through the Pride in Place programme, revitalising local areas and supporting footfall, which can include high streets. We are strengthening access to business support via the Business Growth Service, helping SMEs access finance, advice, and digital tools to grow. And later this year we will bring forward a new High Streets Strategy, to reinvigorate our communities. We are working with businesses and representative bodies to pull this Strategy together.
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