Budget 2024: In a tax raising Budget, the Chancellor has increased employers’ national insurance (NI) by 1.2% to 15% from April 2025
Budget 2024:
In a tax raising Budget, the Chancellor has increased employers’ national insurance (NI) by 1.2% to 15% from April 2025.
As well as that, the secondary threshold will be cut from £9,100 to £5,000 which will see higher payments for employers as more staff become liable for NI payments.
The rise in employers’ NI which will come into effect in April 2025 will affect the majority of businesses with an unavoidable additional charge on all PAYE employees.
However, there will be some benefit with an increase in the employment allowance from £5,000 to £10,000 from April 2025.
The head of retirement policy at Quilter was quoted to say: ‘The 1.2% increase in employers’ national insurance is designed to generate immediate revenues without directly increasing taxes on individual workers in theory’.
‘However, it represents a complex challenge for businesses as they grapple with higher payroll costs. It’s also a technical change that many people won’t have a full understanding of so will not cause the kind of furore that upping income tax might have’.
If you complete calculations, taking into account the secondary threshold has dropped to £5,000 if an employee’s gross pay is £30,000 then an employer will see a £865.80 increase in their national insurance costs for that employee.
Therefore, the total cost to employ someone on £30,000 will now be £33,750 compared to £32,884.20 under the previous rules.
This now raises questions about whether business growth ambitions will be stunted because of this increase, as it makes it more expensive for businesses to hire staff and is inconsistent with an agenda for economic growth and the rise will put further pressure on businesses, who are already facing a mix of challenges.
