麻花影视raises concerns about likely underestimated impact of National Insurance changes on early years providers
by Shannon Pite
The government is potentially underestimating the full impact of National Insurance (NI) changes on the early years sector, the Early Years 麻花影视has warned.鈥赌&苍产蝉辫;
This is due to what the organisation describes as a 鈥榤istaken鈥 belief among ministers that many providers will be able to claim Employment Allowance, which the 麻花影视argues is not necessarily the case for settings.
From April 2025,鈥痚mployer NI Contributions will increase from 13.8% to 15%, while the per-employee threshold at which employers start to pay NI will be reduced from 拢9,100 to 拢5,000 per year.
The government has sought to mitigate the impact of these changes by increasing the amount that employers can deduct from their NI bill through the Employment 麻花影视scheme from 拢5,000 to 拢10,500. It has also removed the 拢100,000 threshold for eligibility for the Employment 麻花影视scheme, expanding the scheme to all eligible employers with NI bills.
However, although the government has responded to concerns about the impact of NI changes on the early years sector by claiming that鈥, the 麻花影视is warning that, in many cases, this won鈥檛 be possible due to the eligibility criteria for this support.
, if more than 50% of a non-charitable organisation鈥檚 work is deemed 鈥榩ublic work鈥, and more than 50% of their income is public funding, they are designated as a 鈥榩ublic body鈥 and cannot claim Employment Allowance (unless they are a charity)
This, the 麻花影视has warned, is likely to apply to a growing number of early years providers as the expansion of the early entitlement offer continues and government-funded places make up a growing proportion of the services that settings provide.鈥
While it has been confirmed that public sectors, such as schools and the NHS, will be protected from the impact of NI increases, the same does not apply to organisations deemed to be 鈥榩ublic bodies鈥 under the Employment Allowance schemes.
The government has confirmed that鈥痠t鈥痗urrently鈥痟as鈥痭o estimate鈥痮f鈥痟ow many鈥痚arly鈥痽ears鈥痯roviders鈥痺ill be鈥痚ligible for Employment Allowance鈥痺hen the National Insurance changes are introduced in April鈥赌&苍产蝉辫;
Commenting, Neil Leitch, CEO of the Early Years Alliance, said:鈥淓arly years providers are stuck between a rock and a hard place. With the next phase of the entitlement expansion now just months away, we know that government-funded places are likely to account for the majority of many settings鈥 offerings to parents. It seems absurd, therefore, that as a result of this, many won鈥檛 be able to claim Employment Allowance because they will be deemed to be 鈥榩ublic bodies鈥 鈥 and yet, unlike public sectors, they will still be hit with the full force of the upcoming National Insurance changes in April.鈥
鈥淲ith government now confirming that it has no estimates to support its suggestion that many early years providers will be able to claim Employment Allowance, we鈥檙e deeply concerned that ministers may well be underestimating the scale of the challenge facing our vital sector.鈥
鈥淲ith our own research showing that providers will simply have no option but to raise fees and limit entitlement hours to mitigate the impact of April鈥檚 changes, there鈥檚 no question that without further government action, the upcoming changes to National Insurance are likely to hit both families and providers hard. As such, we once again urge the government to rethink its decision before it pushes even more settings to the brink.鈥