The Federation of Small Businesses was responding to a 1.25 per cent increase in National Insurance Contributions for employers, employees and sole traders alongside a 1.25 per cent increase in dividend taxation.
Ruth Lambert, the FSB's development manager for Wiltshire and Somerset, said: “These hikes will have business owners and sole traders feeling demoralised at the point when they’re trying to recover from the most difficult 18 months of their professional lives. For those thinking about starting up, they send completely the wrong message.
“Business owners who have done all they can to retain and support their staff during the pandemic are now being punished for that loyalty with an £11 billion increase in NICs, which essentially serve as a jobs tax.
“This regressive levy hits employers and sole traders without meaningful regard for how their business is performing. And this increase will stifle recruitment, investment and efforts to upskill and improve productivity in the years ahead.
“At the same time those running companies, many of whom were left out of pandemic support measures, face a fresh assault on dividend revenue.
“It’s extremely disappointing to see the Government undermining the good work it did last year in raising the Employment Allowance to provide some protection for small employers.“Instead of breaking manifesto promises, we had hoped this administration – which has repeatedly pledged its support for small enterprises – would build on that progress against a backdrop of spiralling input prices, skills shortages, supply chain disruption, the reintroduction of business rates and emergency loan repayments. This move marks an anti-jobs, anti-small business, anti-start up manifesto breach.
"The Government should now increase the Employment Allowance to mitigate the damaging impacts of these hikes on the small firms that make-up 99 per cent of our business community.”