Chancellor Rachel Reeves has confirmed employers will pay more in National Insurance (NI) from next year.
Slammed by businesses as a “tax on jobs”, the rate hike will see bosses pay 15 per cent on contributions, up from 13.8 per cent.
As it stands, employers pay National Insurance a rate of 13.8 per cent on an employee’s earnings above £175 a week.
This move from the Chancellor represents a 1.2 per cent hike on NI contributions for employers.
Combined, the hike to the NI rate and lowering of its threshold for bosses is part of the Chancellor’s funding plans.
Reeves is looking to earn £20billion from the tax overhaul to generate a windfall for the NHS.
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Keir Starmer is under fire for being perceived to be going against his pledge
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Before July’s General Election, Labour promised that it will not raise NI contributions for “working people”.
This pledge also included not raising income tax or VAT on those are considered to be “working”.
As such, speculation spread that businesses would be targeted by the Government instead.
Contributions are made by both employees and employers through National Insurance which is a tax on earnings, or on profits for the self-employed.
National insurance (NI) is essentially a tax on everything you earn, or the profits you make if you’re self-employed.
During the Budget, Reeves outlined why the Government views hiking the rate on employers as a necessity.
She explained: “But any responsible Chancellor would need to take difficult decisions today. To raise the revenues required to fund our public services.
“And to restore economic stability. So in today’s Budget, I am announcing an increase in employers’ national insurance contributions.
“We will reduce the secondary threshold – the level at which employers start paying national insurance on each employee’s salary – from £9,100 per year to £5,000.
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Reeves outlined the rate changes in her Budget announcement
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“This will raise £25billion per year by the end of the forecast period. I know that this is a difficult choice. I do not take this decision lightly.”
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