Exemption vote for carer’s NIC fails

Exemption vote for carer’s NIC fails

Suneel Gupta, partner and head of private healthcare at leading audit, tax and consulting firm RSM UK, comments on the House of Commons’ vote against exempting care providers from the rise in employers’ National Insurance contributions (NICs)

“This decision is a missed opportunity for government to help a sector which is in dire need of support. We hope that funding earmarked for local authorities will filter through to the social care sector to help soften the blow and compensate for the increase in employers’ NIC and National Minimum Wage – which will be a double whammy for the sector in April. But only time will tell. Care providers will be counting down to the Spring Statement and remain hopeful that support for them isn’t overlooked.

“In the meantime, providers need to manage their costs and compliance accordingly. Time is of the essence, as they don’t have long to prepare for these cost increases. Many will be stuck between a rock and hard place, as pressure on margins mean they’ll struggle to shoulder the costs themselves, and passing on the costs to residents is often not an option. Providers may want to consider implementing share-based structures, such as share options which can be more tax-efficient, or salary sacrifice for a non-cash benefit such as pension contributions.

“With the care sector already facing considerable challenges, the NIC increase is undoubtedly going to give management even more cause for concern. It’s time for the sector to find ways of working more efficiently, harnessing their people and operational data to drive effective workforce planning to mitigate the financial impact of the planned increases. As a longer-term approach, the investment and adoption of technology will be key to gain a better understanding of supply and demand, optimise shift patterns, allocate staff more effectively and explore more flexible staffing models to minimise costs. Until then, targeted funding from government is crucial to prevent providers from collapsing, resulting in a further squeeze on supply in the sector.”