The chancellor Rachel Reeves is reportedly considering a hike in the existing rate of employers’ national insurance at the Budget in October.
Under the current rate of 13.8% on earnings and employee benefits, employers paid £107.9bn in the last tax year, up 35% from £79.1bn pre-pandemic. Employer NI last increased 1.8% from a 12% rate in April 2018.
The national insurance secondary threshold is currently frozen at £9,100 until April 2028 but this could be adjusted, while higher rate earners could also be targeted with a review of the upper earnings limit and Class 4 upper profits limit, as part of the government’s efforts to plug the current shortfall in public spending, estimated to be in the region of £22bn.
Reeves has repeatedly said both during the election campaign and since gaining power that the big three taxes of income tax, employee national insurance contributions and VAT will not be increased under a Labour government.
However, no such assurances have been given as far as employers NI is concerned.
Darren Jones, chief secretary to the Treasury, told the Telegraph that Labour has pledged “not to increase employee national insurance”, but refused to confirm whether the employer component was equally protected.
In 2023-24, employers paid £107.9bn in national insurance contributions, up from £103.bn the previous year. This figure was substantially higher than pre-pandemic when the total paid was 35% lower at £79.1bn.
Employers pay Class 1A and 1B national insurance on expenses and benefits at a rate of 13.8%. Class 1A NI also has to be paid on redundancy payments.
The last government under chancellor Jeremy Hunt reduced employee NICs by 4% in January and April of this year which cost £20bn, but left the employer rate unchanged.
