Four out of five employers say they have been impacted by the increase in National Insurance contributions (NICs), according to a new survey.
The British Chambers of Commerce (BCC) surveyed over 1,100 UK employers and found that the NICs rise has negatively impacted 81% of businesses.
Firms said the rise in employer's NICs from 13.8% to 15.05% had increased staffing costs, forced some to up prices and limited investments.
Hannah Essex, co-executive director of the BCC, said:
"Businesses are telling us that the rise in NICs has been a body blow as they try to get back on their feet.
"When firms are already facing a toxic mix of surging inflation, rising energy costs and supply chain disruption, this increase is very hard to swallow."
The 1.25 percentage increase to NICs is the Government's precursor to the health and social care levy that will apply in April 2023 to boost investment for the NHS and social care.
Chancellor Rishi Sunak has repeatedly defended the manifesto-breaking increase, calling it "necessary, fair and responsible".
The NICs threshold is due to increase in July to £12,570, which the Government hopes will offset some of the difficulties posed by the rate increase.
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