National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Joe Robertson and Jeevun Sandher

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

[Dr Sandher]

First, there is more funding going into the early years, but I will deal with the tax side as I speak to the specific amendments.

Each amendment seeks to carve out an exemption for something, and I am sure that Members across the House identify with and, indeed, support some of those individual exemptions. However, if we were to pass the amendments, they would give specified sectors advantages not enjoyed by others.

[Joe Robertson (Isle of Wight East) (Con)]

It seems to me that the hon. Member’s issue is not with some of the amendments, but with all of them taken together. Why does not he not back some of the amendments?

[Dr Sandher]

I do not, because that would introduce exemptions and perverse incentives and make the tax system less clear. It would make the tax system as a whole less efficient. I will come to the specific ways shortly.

Let us start with non-neutrality. Lords amendments 7, 12 and 16 would create non-neutrality between small charities and non-charities. That would incentivise more social enterprises to be charities instead of businesses. Lords amendments 8, 10 and 14 would create an additional NICs band for small businesses, thereby disincentivising them from growing. Under those amendments, if a business saw its revenue go over £1 million or it employed more than 25 people, all of a sudden it would incur a NICs charge. That is a cliff edge. It would introduce a perverse incentive and reduce productivity and economic growth.