Scottish mid-market businesses are looking to outsource work, freeze salaries or use salary sacrifice schemes to mitigate the impact of tax changes coming into effect in April.

The rate of employers’ National Insurance contributions (NICs) will increase from 13.8% to 15% while the threshold at which employers start paying NICs, will decrease from £9,100 to £5,000 per year. 

BDO’s Economic Engine survey of 500 firms found half (50%) may counter the added cost by hiring more part-time or contract workers, while 46% would consider outsourcing or offshoring work.

More two-fifths (44%) are looking to reduce or scrap planned pay increases or bonuses, while 42% said they would consider salary sacrifice.

Overall, all respondents said they were planning at least one action in response to the imminent rise in employers’ national insurance contributions announced by the Chancellor in the October Budget.

Steve Talbot, head of employment Tax at BDO in Scotland, said: “The increases to employers’ National Insurance Contributions announced at the Budget and the accompanying drop in the threshold at which NIC applies to employee earnings came as a shock to many Scottish businesses.

“Unsurprisingly, the vast majority have been urgently exploring ways to mitigate this imminent jump in their costs.”