Figures from UKHospitality show that more than 1.2 million hospitality staff are not eligible for employer NICs but that in April when the changes comes in, this will be reduced to just over 450,000 people.
The trade body calculates that this will cost the hospitality sector £1 billion.
Describing the changes to employer NICS as ‘regressive’, UKHospitality is calling on the Government to delay them and ‘pursue measures that won’t endanger businesses and jobs’.
“The change to employer NICs is one of the most regressive tax changes ever,” says Kate Nicholls, UKHospitality chief executive.
“The scale of this change is unprecedented, bringing three-quarters of a million people into this employer tax for the first time, and the extent of the impact will be enormous.
“This tax is already forcing businesses to abandon investment, change recruitment plans, reduce headcounts and increase prices to cope with these cost increases.
“At a time when we saw hospitality as the biggest driver of economic growth in November, it’s completely misguided to be punishing a sector that has such growth potential.”
UKHospitality says alternatives have been put forward to the Government in the form of a new rate of employer NICs at 5%, rather than 15%, for earnings between £5,000 and £9,100, or a lower rate for lower-earning taxpayers who work part-time.
Both options would ensure lower earners aren’t hit the hardest, it says.
“I hope the Government can see the devastating impact this will have on businesses, team members and communities, and pause these changes to pursue alternative measures, in partnership with business,” adds Nicholls.