London Daily

Focus on the big picture.
Saturday, Nov 15, 2025

National insurance rise forces UK employers to shoulder £9bn tax burden

National insurance rise forces UK employers to shoulder £9bn tax burden

Bosses say 1.25-point rise heaps pressure on firms already enduring soaring costs linked to Covid and Brexit

Britain’s employers are being forced to shoulder a £9bn tax rise after the government pushed ahead with raising national insurance on Wednesday despite stiff opposition.

Company bosses said the 1.25-percentage-point rise in national insurance contributions (NICs), which is paid by workers and their employers, would add to already severe pressure from runaway inflation and soaring business costs this year linked to Covid, Brexit and Russia’s war in Ukraine.

“[The] national insurance rise piles another cost pressure on top of firms at a time when they can ill afford to bear it,” said Shevaun Haviland, the director general of the British Chambers of Commerce.

“Members are telling us that energy bills are soaring while the price of raw materials are reaching levels many have never encountered before. This comes alongside vastly increased shipping costs and a squeezed labour market.”


According to Treasury figures released in response to a parliamentary question from Labour, the portion paid by employers is to raise £8.8bn for the exchequer in the current financial year.

The brunt of the rise will be borne by key sectors including manufacturing, which is facing extra taxes worth £900m. Employers in the health and social care sector will be taxed £1bn extra, while those in the wholesale and retail trade will face a similar increase and the construction industry will be landed with a bill worth £400m.

Jonathan Reynolds, the shadow business secretary, said the figures showed the government was not on the side of employers. “The Conservatives’ decision to hike taxes during a cost of living crisis will make things even harder for businesses and families,” he said.

Reynolds said Labour would instead have launched a one-off windfall tax on profits made by oil and gas producers amid the surge in energy prices, which would be used to help small firms with tax cuts and support for energy intensive industries such as ceramics.

With inflation at the highest rate since at least the early 1990s, the government has faced heavy criticism from across the political spectrum for pushing ahead with the manifesto-busting NICs rise

Designed to raise billions of pounds to fund health and social care, the move has prompted questions about the timing, amid Britain’s worsening cost of living crisis, with critics arguing that other options could have been pursued to raise the money.

Defending the plan on Wednesday, Boris Johnson said he had “absolutely no problem” with the increase because it was “unquestionably the right thing for our country” as the health service faced growing demand and grappled with a backlog built up during the pandemic.

However, employers groups said it would inflict pain for businesses struggling to recover from the Covid shock to the economy.

Martin McTague, the national chair of the Federation of Small Businesses, said it was a “jobs tax hike” that would hurt workers and employers. “The small business tax burden is now at its greatest since the 1950s – a development which couldn’t have come at a worse time, with spiralling energy costs, input cost inflation, supply chain disruption and Covid-related staff absence all taking their toll,” he said.

Research from the manufacturers’ trade group Make UK shows as many as 60% of industrial firms believe the rise will have a moderate or significant impact on their recruitment plans, while almost three-quarters say it will add to inflationary pressures that will be passed on to consumers.

“The NICs increase is just one of many significant costs facing UK manufacturers and there will be a big question as to whether the UK is a competitive place to do business right now,” a spokesperson for the group said.

The Treasury said it was supporting workers and businesses with rising costs, including a tax cut worth £1,000 for half a million small firms by increasing the employment allowance – a tax break on wage bills – starting from Wednesday.

The chancellor, Rishi Sunak, used his spring statement last month to offset some of the impact of rising inflation, including an increase in the threshold at which workers begin to pay national insurance from £9,880 to £12,570 that comes into effect from July.

On top of a package of energy support including a council tax rebate and loan scheme announced in February, Sunak announced a 5p cut to fuel duty rates, a £500m increase in a household support fund and pledged a 1p cut in the basic rate of income tax in two years’ time.

However, only £1 in every £3 of the measures announced by the chancellor will go to the poorest half of people in Britain, according to the Resolution Foundation. The Institute for Fiscal Studies estimates the national insurance rise will rake in about £17.2bn in total for the exchequer from workers and employers, far more than the £6.3bn cut for workers benefiting from the threshold change.

A government spokesperson said it was supporting employers and workers. “No government can control the global factors pushing up prices, but we will act where we can to support businesses,” they added.

Newsletter

Related Articles

0:00
0:00
Close
UK Urges Poland to Choose Swedish Submarines in Multi-Billion € Defence Bid
US Border Czar Tom Homan Declares UK No Longer a ‘Friend’ Amid Intelligence Rift
UK Announces Reversal of Income Tax Hike Plans Ahead of Budget
Starmer Faces Mounting Turmoil as Leaked Briefings Ignite Leadership Plot Rumours
UK Commentator Sami Hamdi Returns Home After US Visa Revocation and Detention
UK Eyes Denmark-Style Asylum Rules in Major Migration Shift
UK Signals Intelligence Freeze Amid US Maritime Drug-Strike Campaign
TikTok Awards UK & Ireland 2025 Celebrates Top Creators Including Max Klymenko as Creator of the Year
UK Growth Nearly Stalls at 0.1% in Q3 as Cyberattack Halts Car Production
Apple Denied Permission to Appeal UK App Store Ruling, Faces Over £1bn Liability
UK Chooses Wylfa for First Small Modular Reactors, Drawing Sharp U.S. Objection
Starmer Faces Growing Labour Backlash as Briefing Sparks Authority Crisis
Reform UK Withdraws from BBC Documentary Amid Legal Storm Over Trump Speech Edit
UK Prime Minister Attempts to Reassert Authority Amid Internal Labour Leadership Drama
UK Upholds Firm Rules on Stablecoins to Shield Financial System
Brussels Divided as UK-EU Reset Stalls Over Budget Access
Prince Harry’s Remembrance Day Essay Expresses Strong Regret at Leaving Britain
UK Unemployment Hits 5% as Wage Growth Slows, Paving Way for Bank of England Rate Cut
Starmer Warns of Resurgent Racism in UK Politics as He Vows Child-Poverty Reforms
UK Grocery Inflation Slows to 4.7% as Supermarkets Launch Pre-Christmas Promotions
UK Government Backs the BBC amid Editing Scandal and Trump Threat of Legal Action
UK Assessment Mis-Estimated Fallout From Palestine Action Ban, Records Reveal
UK Halts Intelligence Sharing with US Amid Lethal Boat-Strike Concerns
King Charles III Leads Britain in Remembrance Sunday Tribute to War Dead
UK Retail Sales Growth Slows as Households Hold Back Ahead of Black Friday and Budget
Shell Pulls Out of Two UK Floating Wind Projects Amid Renewables Retreat
Viagogo Hit With £15 Million Tax Bill After HMRC Transfer-Pricing Inquiry
Jaguar Land Rover Cyberattack Pinches UK GDP, Bank of England Says
UK and Germany Sound Alarm on Russian-Satellite Threat to Critical Infrastructure
Former Prince Andrew Faces U.S. Congressional Request for Testimony Amid Brexit of Royal Title
BBC Director-General Tim Davie and News CEO Deborah Turness Resign Amid Editing Controversy
Tom Cruise Arrives by Helicopter at UK Scientology Fundraiser Amid Local Protests
Prince Andrew and Sarah Ferguson Face Fresh UK Probes Amid Royal Fallout
Mothers Link Teen Suicides to AI Chatbots in Growing Legal Battle
UK Government to Mirror Denmark’s Tough Immigration Framework in Major Policy Shift
UK Government Turns to Denmark-Style Immigration Reforms to Overhaul Border Rules
UK Chancellor Warned Against Cutting Insulation Funding as Budget Looms
UK Tenant Complaints Hit Record Levels as Rental Sector Faces Mounting Pressure
Apple to Pay Google About One Billion Dollars Annually for Gemini AI to Power Next-Generation Siri
UK Signals Major Shift as Nuclear Arms Race Looms
BBC’s « Celebrity Traitors UK » Finale Breaks Records with 11.1 Million Viewers
UK Spy Case Collapse Highlights Implications for UK-Taiwan Strategic Alignment
On the Road to the Oscars? Meghan Markle to Star in a New Film
A Vote Worth a Trillion Dollars: Elon Musk’s Defining Day
AI Researchers Claim Human-Level General Intelligence Is Already Here
President Donald Trump Challenges Nigeria with Military Options Over Alleged Christian Killings
Nancy Pelosi Finally Announces She Will Not Seek Re-Election, Signalling End of Long Congressional Career
UK Pre-Budget Blues and Rate-Cut Concerns Pile Pressure on Pound
ITV Warns of Nine-Per-Cent Drop in Q4 Advertising Revenue Amid Budget Uncertainty
National Grid Posts Slightly Stronger-Than-Expected Half-Year Profit as Regulatory Investments Drive Growth
×