TheBriefing
NATIONAL INSURANCE
NIC hike ‘caught us off guard’, says CBI
Businesses up and down the UK were unprepared for the rise in employers’ National Insurance Contributions (NICs) and were surprised by the government’s announcement, according to the Confederation of British Industry (CBI).
Chief executive Rain Newton-Smith said the government’s decision to raise the rate and lower the NICs threshold “caught us all off guard”.
She told the CBI annual conference: “Along with the expansion and the rise in national living wage which everyone wants to accommodate and the potential cost of the Employment Rights Bill, they put a heavy burden on business.”
Newton-Smith also pointed the spotlight on the retail and hospitality sectors, saying many have gone into “crisis containment” since the Budget. She added: “Firms that have been through really tough years are now in damage control again.”
This will lead to cuts in training and investment, and has the potential to push companies’ net-zero commitments back and “pass on costs to customers”, she warned.
Chancellor Rachel Reeves introduced the controversial NIC changes as part of a package of measures designed to reduce the UK’s deficit.
EXPERTS’ VIEWS ON...
Tax policy
“Business owners will have to decide whether they pay for the National Insurance increase by reduced profits, cost cutting or by putting up their prices. None of those solutions are very palatable.”
Mark Lance, chief executive, Moore
“I’m not going to pretend that it’s going to be easy for businesses, or indeed charities or local authorities, to absorb, especially the National Insurance increase.”
Rachel Reeves, chancellor of the exchequer
“Labour’s commitment to increasing the national living wage will also see HMRC’s highest revenue stream, income tax, continue its upward trend. Those increases and indeed those from the employers’ National Insurance Contributions won’t, however, filter through until after April 2025.”
Tom Goddard, senior associate, Blick Rothenberg
Images: Alamy
REGULATION
Parliamentary report brands FCA ‘incompetent’
The Financial Conduct Authority (FCA) is in need of a radical shake-up after a series of scandals and failures, according to MPs in the all-party parliamentary group (APPG) on investment fraud and fairer financial services.
A report by MPs and lords said the regulator is “incompetent at best, dishonest at worst”.
It found the FCA did “too little, too late – or nothing” to prevent financial services firms from mistreating consumers and small businesses, or punish wrongdoing after the fact.
“[The FCA’s] actions are slow and inadequate, its leaders opaque and unaccountable,” APPG co-chair Bob Blackman MP wrote in the report.
“Errors and inaction are too common… there is little accountability, and those who challenge a top-down ‘official line’ on any given issue are bullied and discriminated against, or even managed out,” the report goes on. The findings pile further pressure on the UK’s main financial regulator, which has been criticised by several independent reviews. Chancellor Rachel Reeves told the FCA in November that it should encourage more “sensible risk-taking” across the City.
News in numbers
The number of ATMs that have disappeared from UK high streets since 2021.
Source: Link
The number of publicly named UK tax defaulters, up from 543 the previous year.
Source: HMRC
The number of UK taxpayers paying an effective tax rate of 60% following the removal of the personal allowance for those earning between £100,000 and £125,124 – an 18% increase.
Source: HMRC
The proportion of UK SMEs that say the National Insurance increase announced in the Budget will affect them negatively.
Source: Moore UK
HMRC’s total tax receipts in 2023/24, up £24bn.
Source: HMRC
The slump in residential stamp duty take as high house prices curb transactions.
Source: HMRC
MENTAL HEALTH
Three out of four accountants ‘burned out’
Long working hours and high levels of stress mean the majority of accountants feel burnout is affecting their performance, according to accountants’ charity Caba.
Its survey found 74% of accountants had felt burnt out in the last 12 months, a 20% increase since 2022. Around 36% said they have suffered insomnia in the last year.
The survey also found that 38% of accountants aged under 30 say they experience indicators of burnout often – the highest of any age group.
Caba chief executive Dr Cristian Holmes said: “As a sector, accountancy has proven to be especially vulnerable. For some, long working hours and tight deadlines can make for a high-pressure environment, which can sometimes lead to severe physical, emotional and behavioural symptoms we often associate with burnout.”
Indices
UK GDP growth
0%
Between July and September 2024
UK unemployment
Between August and October 2024
UK employment rate
Between July and September 2024
Consumer prices index
As of November 2024
House price index
As of November 2024
House prices
As of November 2024
