NATIONAL INSURANCE RISES MAY THREATEN ANY RECOVERY IN EMPLOYMENT

Date 9 December For immediate release Subject BDO’s Response to today’s Pre-Budget Report 9 December 2009 BDO’s Response to Today’s Pre-Budget report NATIONAL INSURANCE RISES MAY THREATEN ANY RECOVERY IN EMPLOYMENT The Chancellor announced a further 0.5 per cent hike for national insurance across the board employees, employers and the self employed. This will apply from April 2011 and comes on top of the 0.5 per cent rise already announced only a year ago in the 2008 Pre-Budget Report. The new rates for 2011/12 will rise to 12 per cent for employees, 13.8 per cent for employers, and 9 per cent for the self-employed (for employees and self employed earning over £43,875 per year the rate on amounts over that limit will be capped at 2 per cent rather than 1 per cent). These measures represent the principal tax collection announcement in the Pre-Budget Report and will collect an additional £6 billion for the Treasury. Stuart Lisle, Tax Partner, BDO Stoy Hayward Southampton comments: "Sadly, significant national insurance rises are an unsurprising response to the £175 billion plus deficits announced for both 2009/10 2010/11 in the Chancellor's Pre-Budget Report. Together with VAT and income tax, national insurance is one of the three largest tax collectors and this was a predictable response by an administration that has 'form' with previous national insurance raids. "However, I am particularly concerned that the rise in employer's national insurance rise may inhibit improvement in the aggregate level of employment. In essence, employers national insurance contributions represent a tax on jobs. We probably now know the full picture on national insurance increases but we are only on the first chapter with regard to VAT and income tax." - Ends – Word Count: 368 Note to editors BDO LLP operates across the UK with some 3,000 partners and staff. BDO LLP is a UK limited liability partnership and a UK Member Firm of BDO International. BDO in Northern Ireland is a separate partnership operating under a licence agreement. BDO International is a world-wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity world-wide and no BDO Member Firm is responsible for the acts and omissions of another member. The network is coordinated by BDO Global Coordination B.V., incorporated in the Netherlands with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. The combined fee income of all the BDO Member Firms was $5.14 billion in 2008. The global network has 1,095 offices in 110 countries and more than 44,000 partners and staff provide business advisory services throughout the world. BDO LLP and BDO Northern Ireland are both separately authorised and regulated by the Financial Services Authority to conduct investment business. BDO is the brand name for the BDO International network and for each of the BDO Member Firms. Contacts Tel: 020 7983 3590/2761 Email: Charlotte.freeman@bdo.co.uk Joy.frascinella@bdo.co.uk Gill.carson@bdo.co.uk http://www.bdo.uk.com/news.html http://twitter.com/BDOaccountantPR