National Insurance Hike for Umbrella Workers Nearly Twice That of Regular Employees
Umbrella workers, who are self-employed contractors working through an umbrella company, are set to face a significant increase in their National Insurance contributions (NICs) from April 2022. The hike is nearly twice that of regular employees, and it is expected to affect thousands of workers across the UK.
The government announced in September 2021 that the NICs for umbrella workers would increase from 13.8% to 15.05%, which is a rise of 1.25%. This is in addition to the 1.25% increase in NICs for all employees, which was announced earlier this year to fund the NHS and social care.
The increase in NICs for umbrella workers is due to the fact that they are currently paying a lower rate of NICs than regular employees. This is because they are classified as self-employed, even though they work through an umbrella company. The government has decided to align the NICs for umbrella workers with those of regular employees to ensure fairness and to raise additional revenue.
However, the increase in NICs for umbrella workers has been met with criticism from industry experts and workers alike. Many argue that umbrella workers are already paying a higher rate of tax than regular employees, as they do not receive the same benefits and protections. They also argue that the increase in NICs will make it even harder for umbrella workers to make ends meet, especially as they are already facing financial uncertainty due to the pandemic.
The increase in NICs for umbrella workers is also expected to have a significant impact on the recruitment industry. Many recruitment agencies rely on umbrella companies to provide a flexible workforce for their clients. The increase in NICs is likely to make it more expensive for recruitment agencies to use umbrella companies, which could lead to a reduction in the number of available jobs for umbrella workers.
In conclusion, the increase in NICs for umbrella workers is a controversial move by the government. While it is intended to raise additional revenue and ensure fairness, it is likely to have a significant impact on the recruitment industry and the thousands of umbrella workers across the UK. It remains to be seen how this will play out in the coming months and years, but it is clear that the government will need to carefully consider the impact of its policies on the self-employed workforce.