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Government changes to National Insurance contribution for employers have now come into force- after being announced in the Autumn Budget
A small business owner in Norfolk is telling us an increase in employers taxes- could lead to artificial intelligence taking over more jobs.
The rate of employer’s National Insurance Contributions (NIC) has increased by over one percent, taking the rate of this levy on their staff’s earnings to 15%.
HM Revenue & Customs (HMRC)’s impact assessment states these changes will impact around 1.2 million employers.
The changes to employer NICs announced in the Budget are forecast to raise between £23.8 billion and £25.7 billion a year, for the five years 2025/26 to 2029/30.
However, the government plans to provide compensation for public sector employers over the five-year period, worth between £4.7 billion and £5.1 billion a year.
“We can’t put our prices up again, we’ve already done that”
Ian Howes is from marketing group, Nu image based in Norwich:
“This move from the Government feels like it goes directly against their pledges to go for economic growth.
“Thanks to this increase, we’ve turned off recruitment off in the short-term and are basically just trying to maintain our place in the market now.
“The team has slightly been reduced but that’s largely due to naturally causes, like people moving to jobs elsewhere, so we haven’t had to make any redundancies.
“We’re are certainly not looking to grow at the moment. That’s completely different compared to what we forecast when we originally looked at the middle of the year.
“The cost of employment is eating into our margins and we can’t put our prices up again, we’ve already done that”.
“Business owners carry the burden of not only making sure that you and your family is okay, but also making sure that the 16 people you employ and their families are fine.
“Because we’re a small business you do carry that, but I’m not sure it’s something that large businesses and corporations feel as acutely.
The changes in more detail:
The government announced three changes to employer NICs in the 2024 Autumn Budget to take effect from 6 April 2025:
-An increase in the rate of employer NICs – ‘secondary Class 1 NICs’ – from 13.8% to 15%.
-A cut in the secondary threshold – which is the point at which employers become liable to pay NICs on employees’ earnings – from £9,100 a year to £5,000 a year.
-An increase in the Employment Allowance. This currently allows businesses with employer NICs bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NICs bill.
The Allowance will be increased from £5,000 to £10,500, and the £100,000 threshold for eligibility will be removed, to expand it to all eligible employers with employer NICs bills.
What’s the Government said on this?
The Treasury says these changes means those with the “broadest shoulders” will pay more to fix the public finances.