[Northern Ireland] Study shows National Insurance rise 'increases cash in hand risk'

In Northern Ireland, new research has revealed that the rise in employers' National Insurance (NI) increases the risk that businesses will make cash-in-hand payments to staff, BBC News reports. 

From April, employers have had to pay NI at 15 per cent on salaries above £5,000, up from 13.8 per cent on salaries of more than £9,100. A change which makes it more expensive for businesses to employ people.

The study for Stormont's Department of Finance, conducted by Ulster University academics, included consultation with business groups. It found that the NI rise risks encouraging the "informal economy".

"There is an increased risk that businesses could return to operating on a cash-in-hand basis only," the analysis from the university's Economic Policy Centre (EPC) said. Adding that it is "important to note this point was only expressed in a small minority of consultations".

The EPC’s main conclusion is reportedly that the rise in employers' NI will have a greater impact in Northern Ireland compared to any other UK region because Northern Ireland is a region where pay is relatively low and the greatest proportional impact of the NI increase is on employers of lower paid staff.

The study found that Northern Ireland employers had been prepared for a rise in the National Living Wage, however, the NI hike was unexpected and so was more difficult to manage.

The analysis said, "Overall, employers were accepting of the NLW increase, perhaps higher than most would have liked but that is the typical response from employers most years.

"This acceptance reflects the knowledge that the government increases the NLW rate annually and also because salaries are being driven higher by labour market forces in any case."

Responding to its findings, Finance Minister John O'Dowd said the study "reaffirms that decisions in Westminster are having a detrimental impact on our business community and voluntary sectors as well as impacting on our public finances".

Source: BBC News

Quotes via original reporting

In Northern Ireland, new research has revealed that the rise in employers' National Insurance (NI) increases the risk that businesses will make cash-in-hand payments to staff, BBC News reports. 

From April, employers have had to pay NI at 15 per cent on salaries above £5,000, up from 13.8 per cent on salaries of more than £9,100. A change which makes it more expensive for businesses to employ people.

The study for Stormont's Department of Finance, conducted by Ulster University academics, included consultation with business groups. It found that the NI rise risks encouraging the "informal economy".

"There is an increased risk that businesses could return to operating on a cash-in-hand basis only," the analysis from the university's Economic Policy Centre (EPC) said. Adding that it is "important to note this point was only expressed in a small minority of consultations".

The EPC’s main conclusion is reportedly that the rise in employers' NI will have a greater impact in Northern Ireland compared to any other UK region because Northern Ireland is a region where pay is relatively low and the greatest proportional impact of the NI increase is on employers of lower paid staff.

The study found that Northern Ireland employers had been prepared for a rise in the National Living Wage, however, the NI hike was unexpected and so was more difficult to manage.

The analysis said, "Overall, employers were accepting of the NLW increase, perhaps higher than most would have liked but that is the typical response from employers most years.

"This acceptance reflects the knowledge that the government increases the NLW rate annually and also because salaries are being driven higher by labour market forces in any case."

Responding to its findings, Finance Minister John O'Dowd said the study "reaffirms that decisions in Westminster are having a detrimental impact on our business community and voluntary sectors as well as impacting on our public finances".

Source: BBC News

Quotes via original reporting