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Could contractors ease the burden of NI Increases?

The Jonathan Lee blog section is a great place to discover all the latest news and views on the
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With all pandemic restrictions about to be lifted for the first time in 2 years, many businesses were looking forward to a more positive return in 2022 but are now facing big increases in costs, with the energy crisis and the impending increases to National Insurance contributions which were announced in 2021.

In this blog, I take a brief look at what the changes are, and how this will impact recruitment and staffing in 2022.


What are the changes to NI?

Employers and employees will from 6th April 2022 each be taxed an additional 1.25 percentage points – estimated to cost employers about £6.5bn a year, with employees contributing an additional £4.3bn.

Some options that still exist to support employers that offer zero-rate NI include;

·         Anyone aged under 21

·         Apprentices aged under 25

·         Ex-forces personnel in their first civilian role for up to 12 months


Recruitment still on the rise

We are still seeing record-levels of job requirements being advertised as businesses continue to employ new staff and invest in growth plans, with competition for skills in high demand driving salaries upwards. The increase to NI will exacerbate this further and the cost to take on new hires becoming increasingly prohibitive.

Unfortunately the combination of these factors mean that some businesses are being forced to rethink their plans both for recruitment and for pay reviews whilst they undertake a real assessment of the impacts of these changes on cash flow and their continued ability to offer competitive packages.


Could contractors ease the burden?

Following the implementation of the IR35 reforms in the private sector in 2021, the last 12 months has seen many businesses implement robust systems to review and implement their off-payroll workforce/IR35 obligations. This has led to increased confidence is considering using contractors which can contribute to reducing Employer’s NI costs as they grow their teams to meet demand. 

Using a contract model allows companies to put a fixed cost on a piece of work and avoids the long term commitments associated with permanent employment.

It’s a good idea to explore using contractors for this purpose, moreover in a very competitive market, this strategy boosts access to a “ready-made”, flexible workforce who are accustomed to undertaking assignments to suit client needs and who will often possess specialist expertise, knowledge and experience, meaning they can hit the ground running, and start adding value without the need for training or a lengthy induction process.

If you are thinking about hiring contractors and need some help, advice or assistance, both in terms of candidate availability and in versatile payroll solutions in these demanding times, please give me a call on 01384 446115 and we can discuss your needs and the options available to you.

Grant Nisbet, Director



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