How Will Hospitality Business Owners Be Impacted By The NI Tax Hike?

The NI tax hike isn't good news for many industries, including hospitality. Find out more about how it will affect hospitality businesses.‍

The UK government has recently declared that starting from April 2022, all self-employed individuals as well as employees with an income of more than £10,000 will require to pay more to the Exchequer as a 1.25% increment in National Insurance Contributions (NICs). While the government claims that this measure has been undertaken to raise £12bn in funding in order to support the NHS and social care, this NI tax hike is expected to significantly affect most industries, including the hospitality industry.

What the industry is seeing

According to a recent poll, 89% of employers said they did not want the government to increase National Insurance rates. Analytical reports had revealed that the NI tax hike along with pre-planned cuts to Universal Credit and plans for freezing the IT personal allowance can lead to £1,130 worth of deductions from the earnings of a hospitality employee. As per the figures shared by Liberal Democrats, citizens working in the hospitality industry are expected to bear an extra tax bill of approximately £137m this year. Lobby groups from the hospitality industry have also complained of steep inflations and multiple tax increments as the reason behind a stagnant recovery from the damage inflicted by the coronavirus pandemic.

Other rising costs of concern

Businesses are struggling to improve their profit margins due to a 19% hike in labour costs, 17% rise in food expenses, and 14% increment in the cost of drinks while citizens are facing a cost of living crunch! Taking all of these factors into consideration, coupled with the fact that it comes at a time when hospitality businesses are already dealing with the government’s decision to restore the previous 20 percent rate of VAT for the industry, makes it certain that the NI tax hike is going to impact the hospitality industry negatively and further delay its recovery and growth.

Wrapping up

At roommaster, we understand the importance of the challenges faced by businesses in the hospitality industry. roommaster’s mission isn’t just to provide the best hospitality management system but to ensure hospitality businesses are supported whenever they need it. Our goal is not only to help manage your businesses more efficiently but also to provide ongoing support to engender growth and expansion. This is why we offer competitive pricing, without sacrificing quality or functionality in our software solutions. ‍

Book a demonstration of our award-winning hotel management software.‍