Employers hit with 28bn National Insurance Shock as rate rise bites harder than treasury forecast

"The total cost to employers of NICs rose by 24 per cent in the 12 months to 31 March 2026, climbing from £116bn to £143.9bn. The leap followed the Chancellor's decision to raise the main rate of Employers' NIC from 13.8 per cent to 15 per cent on 6 April last year."

"The increase in NIC has caused real pain for UK businesses and I'm not sure that the policymakers recognised or admitted this when they increased the tax."

"A string of high-profile redundancy announcements in hospitality and retail over recent months have been explicitly blamed on the NIC increase, and recruitment activity has slowed as firms think twice before taking on new staff."

Britain's employers have experienced a £28bn rise in National Insurance Contributions, exceeding Treasury forecasts. The increase, driven by a rate hike from 13.8% to 15%, has resulted in significant financial strain on businesses. Many employers are forced to raise prices or reduce staff. The impact is evident in the labor market, with numerous redundancies in hospitality and retail attributed to the NIC increase. Research indicates that 46% of businesses are reconsidering hiring due to the tax rise, compounding the challenges faced by employers.

Read at Business Matters