British pubs, restaurants and hotels will be forced to pay £216m more in taxes this year thanks to today’s rise in National Insurance for employees and employers.
New figures collated by the Liberal Democrats also showed that workers in the hospitality industry will be hit with a £137m extra tax bill this year, after the 1.25 percentage point increase in National Insurance.
Today’s tax hike will be partially offset for workers by Rishi Sunak’s announcement last month to increase the National Insurance income threshold.
The extra tax bill for employers comes at a time when hospitality businesses are already being squeezed by the government’s decision to restore the previous 20 per cent rate of VAT for the industry, after cutting it to 12.5 per cent in the pandemic.
Hospitality lobby groups have complained that roaring inflation and a slew of tax rises are making the industry’s recovery from Covid more difficult, after already suffering more than most sectors during the pandemic.
UKHospitality says businesses are also facing a squeeze in profit margins, thanks to a 19 per cent increase in labour costs, a 17 per cent increase in food costs and a 14 per cent increase in drinks costs.
London Liberal Democrat MP and business spokesperson Sarah Olney said: “This high-tax and anti-business government is out of touch with pub landlords and restaurant owners. After all the pain of the past two years this tax hike is the last thing London hospitality businesses needed.
“We need footfall back in the City and punters enjoying London’s world class hospitality sector again.”
Boris Johnson today said the increase in National Insurance is “unquestionably the right thing for our country”.
Johnson said he has “absolutely no problem” with the tax hike as “we’ve got to give our doctors and our nurses the wherewithal, the funding” to deal with the 6m-person NHS backlog.
A Treasury spokesperson said:“Tax cuts announced at last week’s Spring Statement mean that 50,000 more businesses and 2.2 million more people will be taken out of paying the Health and Social Care Levy – whilst 70 per cent of workers who do pay National Insurance will be better off too.
“Hospitality firms are also now getting 50 per cet business rates relief, and will benefit from a freeze to the business rates multiplier that puts the brakes on bill increases and is worth £4.6 billion over the next five years.”