By Daniel Hunter
Cutting the rate of employer National Insurance contributions would provide the biggest boost to businesses and the economy, according to a poll by a Preston-based business advisory firm.
The online survey, conducted by Moore and Smalley Chartered Accountants and Business Advisors, found that two fifths (40 per cent) of business owners would prefer a cut in the rate of employer NICs to other tax cuts.
Employers have to pay NICs on the earnings they provide to their employees, with critics arguing this discourages businesses from creating new jobs at a time when company finances are stretched.
Tony Medcalf, tax partner at Moore and Smalley, believes the results of the poll show a desire from businesses to recruit new staff if some of the financial barriers to recruitment are removed.
“This backs up what we hear from clients on an almost daily basis. They have the customer demand to create new jobs but, at a time when the economy is so unstable, they are reluctant to take on new staff if that means paying NICs at 13.8 per cent of the employee’s salary and that’s not to mention recruitment and training costs," he said.
“Clearly, any reduction in the rate of employer NICs, or perhaps a NICs holiday for businesses that create new jobs, would be hugely advantageous for businesses.”
Over a quarter (27 per cent) of business owners surveyed in the poll said they believed a cut in the rate of VAT would provide the biggest benefit to their business.
20 per cent said they would like to see the rate of corporation tax fall further. The main rate of corporation tax is due to fall to 23 per cent in 2013, down from 28 per cent in 2010.
Meanwhile, 13 per cent of business owners thought a further cut in the top rate of income tax would benefit their business most. The top rate of income tax is due to fall from 50 per cent to 45 per cent in April 2013.
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