Prime minister Boris Johnson announced the new measure yesterday, in a bid to fix the long-standing crisis in social care and the NHS backlog exacerbated by the Covid-19 pandemic. 

If agreed by Parliament today (8 September), a 1.25 percentage point rise in National Insurance for both employers and employees, including the self-employed, will come into effect from April 2022.

From 2023 it will become a separate tax on earned income. 

There will also be a 1.25% tax rate increase on income from share dividends.

From April 2022 employers will pay 15.05% in NICs on employees' earnings over £170 per week, compared to 13.8% employer NICs currently.

One printing industry CEO told Printweek: “You’ve got to be effing kidding me. A 9% tax increase on our biggest cost. As if things weren’t hard enough for print.”

BPIF chief executive Charles Jarrold said: “An increase in employers NI will hit employers hard, especially as intrinsically it’s a tax on employment rather than on profits.  

“While it’s encouraging to be seeing the sector bouncing back and increasingly optimistic about the future, demand is still recovering and remains fragile in some markets, and there are real cost challenges elsewhere facing the sector. This is another cost increase and may well be a drag on hiring and recovery, and is very unwelcome.”

Unite the union slammed the moves, and called for a wealth tax and higher wages for care workers.

IPIA general manager Brendan Perring said the news had been greeted by a “mixed reaction” from the association’s members. 

“The 1.25% increase on national insurance contributions and tax on dividends has met with a mixed reaction from our membership. While everyone agrees with the need to support and secure proper funding for the NHS – especially after the incredible work it has done to support our nation through the Pandemic and the immense stress placed on it – there is no doubt that any increase in overheads is unwelcome news for those that have suffered financially over the last 18 months,” he said.

"A key theme that has been fed back is that the major tech and online retail companies have done tremendously well from the pandemic, and while this rise affects them as well, a number of members have pointed out that a scheme to see them pay fair taxes that are within the spirit of the system, versus the letter of the law, could have been a solution to increase NHS funding – rather than increasing the burden on thousands of businesses who do not have the spare capacity to handle an increase in overheads.” 

It also emerged yesterday that online retail giant Amazon paid £492m in what it described as “direct taxes” on UK sales that jumped 50% to £20.63bn.

The Guardian reported that Amazon’s UK warehouse and logistics operation paid just £3.8m extra in corporation tax, despite a £1.9bn increase in sales. 

The GMB union said that Amazon's tax bill was “frankly insulting” and called for “pandemic profiteers” to pay more. 

A number of business bodies have warned that the new Health & Social Care Levy could hit job creation, while the Federation of Small Businesses said the tax rises would be “a hammer blow” for small firms. 

National chair Mike Cherry 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.”

Announcing the measures, Johnson said: “Our mission is to tackle the NHS Covid backlogs and fix social care at the same time. 

“We’re taking necessary, responsible and fair action to protect our NHS and ensure dignity and security in old age.”