National Insurance holidays could end up being one of the many measures Mr Sunak implements in order to help the UK recover financially after the severe impacts of the coronavirus crisis. Mr Sunak has put in place a number of schemes for employers and employees throughout the crisis, and other measures look to be on the table. Under the plans, it is understood, employers could be offered National Insurance holidays in order to stem the expected increase in unemployment.
Currently, employers pay 13.8 percent towards the National Insurance of their employees, as long as they earn above a particular threshold, which usually stands at £169.01 per month.
But reports from the Telegraph have suggested this could be waived for firms taking on new employees.
There are, however, fears of a tax hike to fund the economic cost of the outbreak in the UK.
However, it appears the Prime Minister Boris Johnson has attempted to quell these concerns in recent statements.
When asked if he was contemplating rising taxes, Mr Johnson simply remarked he would be “meeting all manifesto commitments”.
The manifesto which swept Mr Johnson’s party to victory made promises not to raise the rates of income tax, National Insurance or VAT – in a move which pleased many.
Sources told the Telegraph the discussion of tax rises under consideration by the Treasury was being postponed until economic growth recovers.
One source said: “This will not be a consolidation Budget.
“But in terms of the format or timing of something like that rather than the content, what I had said previously is that I was planning to have an autumn Budget to get us back onto a cycle of autumn Budgets.”
It is thought Mr Sunak could contemplate a number of other measures to assist the economy.
These include benefit increases, raising the minimum wage or guaranteeing a living wage for care workers.
The report from the Telegraph suggests focus is now on stemming unemployment, including youth unemployment.
Also on the agenda is a focus on skills retraining, and incentivising employers for taking on new staff.
A policy similar to a National Insurance holiday was introduced by the coalition government in 2010.
The then-Tory-Liberal Democrat alliance gave new businesses outside of London, the south east and east of England a NI holiday worth up to £5,000 for each of their first 10 employees.
Mr Sunak has previously stated Britain should prepare for a severe recession because of coronavirus.
Speaking to the Lords Economic Affairs Committee, he said: “We are likely to face a severe recession, the likes of which we haven’t seen and of course, that will have an impact on employment.”
The government now has to address billions of pounds in spending debt as a result of the crisis.