London Daily

Focus on the big picture.
Saturday, Jun 20, 2026

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
Long-Term Economic and Political Effects of Brexit Continue to Shape UK Policymaking
Digital Disinformation Emerges as a Growing National Security Challenge in the United Kingdom
Britain's Dependence on Global Energy Routes Drives Push for More Resilient Supply Chains
Rising Energy Costs Continue to Threaten Britain's Cost-of-Living Recovery
Concerns Grow Over Far-Right Organizing and AI-Driven Online Radicalization in Britain
UK-Led Global Partnerships Conference Calls for Reform of International Development Finance
Middle East Tensions Continue to Weigh on UK Business Confidence
Reports of Middle East Peace Deal Ease Pressure on UK Energy Prices
UK Warns Middle East Conflict Could Worsen Global Food Insecurity
UK Economy Loses Momentum After Strong Start to 2026
Bank of England Holds Interest Rates at 3.75% Despite Easing Inflation
Brexit's Legacy Remains Deeply Divisive Ten Years After the UK Voted to Leave the European Union
International Anti-War Conference Opens in London as Debate Over European Rearmament Intensifies
UK Health Authorities Introduce Drug Price Concessions Amid Record NHS Medicine Shortages
Sir David Attenborough Supports Sherwood Forest Conservation Efforts After Loss of Major Oak
Aardman Animations Marks 50 Years With Major Exhibition in Bristol
Drax Cleared After Investigation Into Wood Pellet Sourcing Practices
Jaguar Land Rover Shifts Toward Hybrid Vehicle Production for US Export Strategy
UK Police Arrest Liberal Democrat MP Cameron Thomas on Suspicion of Assault
Health Concerns Grow Over Elevated Kidney Cancer Rates Near Lancashire PFAS Factory
Royal Navy F-35 Jets Conduct First NATO Air Warfare Exercise from Finnish Airspace
UK NHS Issues Price Concessions for Medicines Amid Severe Drug Shortages
Heathrow Third Runway Project Faces Sharp Downward Revision in Expected Economic Benefits
Amber Heat Warning Issued Across Parts of England and Wales as Temperatures Rise
Train Collision Near Bedford Disrupts UK Rail Network and Leaves Multiple Injured
Bank of England Data Suggests Brexit Has Reduced UK Economic Output by Around Six Percent
UK Borrowing Costs Hold Near 4.8 Percent as Political Uncertainty Fuels Market Pressure
Andy Burnham Emerges as Front-Runner to Succeed Keir Starmer After Landslide Makerfield Victory
Prime Minister Keir Starmer Faces Mounting Pressure to Resign After Labour By-Election Defeat in Makerfield
Payment Fraud Losses Reach £1.28 Billion and Raise National Security Concerns
Lending to Small Businesses Climbs to Highest Level Since Late 2024
Middle East Conflict Clouds UK Economic Recovery Despite Strong First-Quarter Growth
Bank of England Moves to Simplify Capital Rules for Smaller Lenders
UK Government Fast-Tracks National Security and Cyber Resilience Legislation
Ofcom Investigates Telegram Over Alleged Role in Organising Arson Attacks
MPs Press Fujitsu to Speed Compensation for Post Office Horizon Victims
Bank of England Delays Final Basel III Implementation Changes to Support UK Banking Competitiveness
Pound Falls as Political Uncertainty and Bank of England Signals Weigh on Markets
0Andy Burnham Wins Makerfield By-Election and Emerges as Main Challenger to Keir Starmer
Dorset Council Tests AI Tools to Streamline Local Planning Applications
UK Researchers at Kew Gardens Use AI to Speed Up Identification of Threatened Plant Species
UK Gilt Yields Ease Toward 4.8% as Inflation and Labour Market Data Weigh on Bonds
Bank of England Data Shows Resilient SME Lending Despite Economic Slowdown
UK Finance Reports Weakening Services Activity as Business Confidence Softens
UK Introduces Mandatory Internal Complaints Process Under Data Use and Access Act
Bank of England Governor Andrew Bailey Flags Geopolitical Uncertainty as Key Risk to Inflation Outlook
Bank of England Holds Interest Rates at 3.75% as Policymakers Signal Cautious Stance on Inflation Risks
Cornwall Clergy Raise £40,000 for Church Repairs Through Everest-Themed Charity Challenge
UK Business and Social Landscape Reflects Strain From Geopolitical and Domestic Pressures
Tensions Grow in UK Over Sikh Kirpan and Religious Symbolism in Public Debate
×