The Scottish Pelagic Processors Association (SPPA) and the Scottish Seafood Association (SSA) are calling proposals to change U.K. taxes and increase National Insurance contributions a threat to Scotland’s seafood industry.
The U.K.’s government recently announced it will require increased contributions to its National Insurance – a tax on both employees and employers on earnings and by employers on certain benefits provided to employees.
The increase, which would be effective April 2025, would see employers’ insurance rates increase from 13.8 percent to 15 percent; the threshold for employers to start paying decrease from GBP 9,100 (USD 11,400, EUR 10,900) to GBP 5,000 (USD 6,200, EUR 6,000); and the employment allowance increase from GBP 5,000 (USD 6,200, EUR 6,000) to GBP 10,500 (USD 13,200, EUR 12,600).
Inheritance tax changes comprise business property relief alterations, mainly applying to inherited agricultural assets worth more than GBP 1 million (USD 1.25 million, EUR 1.19 million).
In a joint statement, the Scottish Pelagic Processors Association and the Scottish Seafood Association said the changes could threaten the seafood industry in Scotland via additional burdens for businesses that are still struggling to recover from the Covid-19 pandemic and a surge in energy costs.
“The proposed increases in National Insurance are expected to place an undue financial burden on employers, which could lead to difficult decisions regarding future staffing and investment,” the statement said. “Seafood businesses that were hailed as key to food security during the pandemic are facing numerous challenges as they work to stabilize and grow in a post-pandemic environment. The additional strain from proposed higher National Insurance contributions may force many businesses to consider layoffs or reductions in workforce hours to control costs, ultimately stalling the economic recovery we so desperately need.”
In June 2022, the U.K. government released a food strategy document which called for a more sustainable and more affordable food system. The document identified the U.K.’s seafood sector as an “essential source of employment” and had the stated goal of delivering a prosperous agrifood and seafood sector.
“Food security remains a priority for the government, but the reality is that without a thriving food business sector, achieving this goal becomes increasingly difficult,” the SPPA and SSA statement said. “Businesses are the backbone of our economy, and their ability to grow and create jobs is essential for ensuring food security and overall economic health.”
The two organizations also said that while changes to the inheritance tax are largely going to impact agriculture, those impacts could ripple out across the wider economy and damage seafood.
“Although primarily focused on agriculture business, this tax is far wider and far reaching in affecting all business. By increasing the tax burden on families and businesses, the government may inadvertently limit the capital available for reinvestment in the economy,” the two organizations said. “This move contradicts the government’s commitment to supporting businesses and promoting growth, as it creates a climate of uncertainty that can stifle innovation and expansion efforts.”
Portions of the seafood industry are already dealing with new taxes and additional burdens. In 2022, restaurants in the U.K. were hit with an increase in the country’s value-added tax. That added to the burden faced by U.K. fish and chip shops, which were already dealing with higher prices after the U.K. placed a 35 percentage point hike on tariff rates on Russian seafood. At the time, 30 percent to 40 percent of all fillets used in shops were of Russian origin.
The U.K. seafood industry has also had to grapple with Brexit, which has continued to undermine segments of the industry. Additional post-Brexit bureaucratic costs – from red-tape on exports to the E.U. and trade barriers that prevent exporting entirely – have added to the industry’s cost burden.
Adding a new tax and another potential economic barrier could end up having unintended consequences for Scottish seafood, the SPPA and SSA said.
“We urge the government to reconsider these budget changes and engage in meaningful dialogue with the business community,” they said. “A collaborative approach is necessary to ensure that policies support growth, job creation, and economic stability.”
