Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of National Insurance contributions on small and medium-sized businesses ability to hire new staff.

A Tax Information and Impact Note (TIIN) was published alongside the introduction of the Bill containing the changes to employer NICs. The TIIN sets out the impact of the policy, including on businesses. The Government decided to protect the smallest businesses from the changes to employer NICs by increasing the Employment Allowance from £5,000 to £10,500. This means that this year, 865,000 employers will pay no NICs at all, and more than half of all employers will either gain or will see no change.

The OBR forecast, which accounts for the impacts of employer NICs on the economy, expects that the unemployment rate will fall to 4.1% by the end of 2027 and remaining at that rate for the rest of the forecast.

After accounting for impacts of employer NICs, the OBR still expect the employment level to increase from 33.6m in 2024 to 34.8m in 2029.