Westminster is being urged to exempt the Scottish hospitality industry from the planned increase in national insurance contributions amid warnings of the risk of many businesses “going to the wall”.
The Scottish Liberal Democrats have requested the exemption after research suggested the industry was facing a £369.3 million tax “bombshell” over the next five years due to the rise announced last year.
Chancellor Rachel Reeves confirmed plans to hike employers’ national insurance contributions (NICs) in her October budget, with higher rates and a lower starting threshold.
Restaurants, pubs and hotels across Scotland are warning that the UK Government’s national insurance hike risks many of them going to the wall, but the Chancellor just doesn’t seem to be listening
The rate will increase by 1.2 percentage points to 15% from April 2025, with payments starting when an employee earns £5,000, down from the current £9,100.
Analysis carried out by the Scottish Liberal Democrats shows that in 2025-26, the additional tax bill for hospitality businesses is estimated at around £71.8 million.
The party is also calling on the UK Government to negotiate a youth mobility visa scheme with the EU to so that businesses can recruit the workers they need to fill vacancies.
Scottish affairs spokesperson Christine Jardine MP said: “Restaurants, pubs and hotels across Scotland are warning that the UK Government’s national insurance hike risks many of them going to the wall, but the Chancellor just doesn’t seem to be listening.
To get our economy growing strongly, we should be helping our hospitality sector, not hurting it
“Local businesses like these are the beating heart of our communities, but many are struggling after years of Conservative economic vandalism and poor growth under the SNP.
“This jobs tax would hammer them again, hitting growth and putting thousands of jobs at risk.
“To get our economy growing strongly, we should be helping our hospitality sector, not hurting it.
“That is why Scottish Liberal Democrats secured substantial business rates relief for hospitality in the Scottish budget.
In addition to capping corporation tax for the duration of parliament, the Scottish Government will receive additional Barnett funding on top of a record £47.7 billion settlement as part of support provided in relation to changes to employer national insurance
“The UK Government needs to do far more to support hospitality. Instead of ploughing ahead with this misguided tax hike, the Chancellor needs to listen to local businesses and scrap it now.”
A UK Government spokesperson said: “We delivered a once-in-a-parliament budget to wipe the slate clean and deliver the stability businesses need, laying the foundations for economic growth.
“In addition to capping corporation tax for the duration of parliament, the Scottish Government will receive additional Barnett funding on top of a record £47.7 billion settlement as part of support provided in relation to changes to employer national insurance.”
