National Insurance changes set to cost Perth and Kinross Council an estimated £5.4 million

Perth and Kinross Council is bracing itself for an additional cost of around £5.4 million due to changes in National Insurance (NI) contributions. Starting from April 1, 2025, the threshold for employers to pay NI on each employee’s salary will decrease from £9,100 per year to £5,000, while the rate will increase from 13.8 per cent to 15 per cent. These changes are expected to generate over £25 billion, with the UK Government committing an extra £3.4 billion to Scotland to help offset the increased costs through the Barnett formula.

Following the recent UK budget announcement, Perth and Kinross Council has been crunching numbers to assess the financial implications of the NI adjustments. A spokesperson for the council disclosed that the estimated rise in NI costs for the council is £5.4 million. The impact is also expected to affect the council’s three arm’s length external organizations – Culture Perth and Kinross, Live Active Leisure, and Perth Theatre and Concert Hall.

Culture Perth and Kinross anticipates an additional cost of approximately £97,000 annually, which the chief executive, Helen Smout, describes as “eye-watering.” Perth Theatre and Concert Hall’s chief executive, Christopher Glasgow, highlighted an unexpected £58,000 cost, potentially rising to £67,000 if staffing levels return to normal. Live Active Leisure is projected to face a substantial six-figure increase, with chief executive Paul Cromwell estimating it at around £175,000.

Councillor Ian Massie expressed concerns about the impact of the NI changes on cultural and sports trusts, noting the potential for increased supplier costs. The UK Government has assured that additional funding will be allocated to the Scottish Government through the Barnett Formula to support the costs associated with the NI alterations.

In conclusion, the impending NI changes are poised to have a significant financial impact on Perth and Kinross Council and its associated organizations. The council is navigating through the numbers to prepare for the added costs, while also hoping for continued support to mitigate the financial strain. Amidst these challenges, it underscores the importance of strategic financial planning and resource allocation for local authorities to navigate such unforeseen circumstances effectively.