HMRC urges businesses to explain tax rise to staff

HMRC contacted employers multiple times about the tax rise messaging

HMRC is urging business owners to state what upcoming the National Insurance tax rise is for on employee payslips, reports the Daily Telegraph.

The tax authority has contacted business owners on multiple occasions insisting that they declare the tax increase is “for the NHS”.

An email, seen by the newspaper, said: “The message should read: ‘1.25pc uplift in NICs funds NHS, health and social care’”.

The message also appeared in bulletins sent to employers from HMRC last month, with a poor reception from business owners labelling it as “government propaganda”.

The messaging is not mandatory, said an HMRC spokesperson, but is “strongly encouraged”.

Kitty Ussher, chief economist at the Institute of Directors, told the Telegraph that this move is an “odd initiative” and an attempt to justify “a deeply unpopular and regressive tax on jobs.

“Trying to change the branding doesn’t alter the fact that this is a bad tax being introduced at the wrong time,” she added.

Craig Beaumont, of the Federation of Small Businesses, said: “Taking away people’s pay rises during a cost of living crisis is bad enough, but then having the state instruct firms to write PR on payslips just adds insult to injury.”

Edward Troup, who was a senior civil servant at the tax office in 2016, said on social media that it was questionable whether this request was within the taxman’s legal powers.

How much the National Insurance increase will cost

The National Insurance increase comes into effect from April 6, costing employees, employers and the self-employed a significant sum extra.

A worker on £50,000 will pay £506 more each year from April, for example. It will be used to cover the increased costs of the NHS that resulted from the pandemic initially. From April 2023 it will exclusively be a “health and social care levy”. Millions of workers who are currently exempt from National Insurance will have to start paying from 2023.

Economists have warned that the £11bn tax rise will create unemployment and stifle job creation.

More than 180,000 people signed a petition from the Institute of Directors to scrap the National Insurance rise but the government have insisted that it’s the right decision.  

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How much national insurance hike will cost your business

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