Recruitment plans and staff pay awards are “likely” to be jeopardised by tax increases proposed in the Government’s budget, veterinary sector leaders have warned.

Practice bosses are being advised to plan now for increases to their national insurance contributions, and the national living wage, before they come into force next spring.

But, amid the ongoing Competition and Markets Authority (CMA) review of the sector, VMG president Liz Somerville also urged them to “explore options to increase productivity” to help mitigate the changes’ impact before considering fee hikes.

‘Optimising’

Mrs Somerville said: “By optimising their teams’ skills and talents, they may be able to continue to run their practices smoothly, while enhancing team members’ satisfaction and engagement in their roles.

“Now more than ever, leveraging the talent within our teams is essential. It is likely, however, that some price increases may still be required.”

Under the measures announced in the 30 October statement, employers’ national insurance contributions are to be increased by 1.2% to 15% from next April.

The threshold at which contributions will be due is also set to be cut from £9,100 to £5,000, while the national living wage will rise by 6.7% to £12.21 per hour.

The Government has insisted that the tax changes are necessary to restore stability to the UK economy and will not directly impact working people.

‘Significant implications’

However, despite the long-running pay and conditions dispute affecting the Valley Vets practice group in south Wales, Mrs Somerville echoed the concerns of senior figures in other areas as she argued the measures will have “significant implications” for a veterinary sector that already has high wage costs.

She said: “It’s likely that increases in the national living wage and national insurance may impact the ability of employers to offer pay rises to staff and cause them to revisit recruitment plans.”

SPVS board member and practice owner Kate Higgins also estimated employers would have to pay at least £615 more per year in national insurance for each staff member as she warned the hike “intensifies financial strain” for practices.

She said: “Veterinary practices will likely need to make difficult financial decisions to manage these increased costs while ensuring they can continue delivering essential care.”

Rural areas

Dr Higgins voiced specific concern for the farm sector, warning of an increased risk of business sales linked to planned inheritance tax changes that she fears could “directly impact client numbers and continuity of care in rural areas.”

Meanwhile Mrs Somerville cautioned that moves to increase capital gains tax rates to 18% and 24%, from the present 10% and 20%, could cause some professionals nearing the end of their careers to “re-evaluate retirement plans and leave the sector earlier”.

She added: “Practices have six months to plan before the changes come into force, so it’s vital they use this time to review their data, plans and budgets and make adjustments in readiness.

“We’re also urging our members to consider the impact of uncertainty on our teams and ensure we’re sharing information, educating them as to likely impacts and inviting them to contribute to discussions on productivity savings.

“It’s, of course, important to do this in a way that doesn’t scare teams into worrying about redundancies – already a concern for some. Strong, clear and effective leadership in our sector has never been more important.”