The Government could increase National Insurance contributions (NICs) by 1% for both employers and employees, a report has claimed.

The Times said senior ministers have agreed to increase NICs to put an extra £10 billion into social care, to fund long-term reform and reduce NHS waiting times.

The majority of employers currently pay NICs at a rate of 13.8%, while most employees pay NICs at 12% on their earnings.

The move would go against a Conservative party manifesto pledge not to raise NIC rates.

Dismayed at the possible tax hike while many firms are still reeling from the COVID-19 pandemic, Mike Cherry, chairman of the Federation of Small Businesses, said:

"A lot of business owners have had the worst 16 months of their professional lives.

"Many firms are now struggling with staff being pinged, emergency loans and late payments.

"NICs essentially serve as a jobs tax, making it harder for them to create opportunities.

"To hike them as the furlough scheme and wider support measures end would stop our economic recovery in its tracks before it's even started."

Any move could potentially take effect from April 2022.

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