Businesses plan further job cuts after national insurance hikes

Independent

16-06-2025

A third of business owners are planning further job cuts following April's increase in national insurance contributions (NICs), new research has found.
Many companies are also considering reducing hours, freezing pay, and raising prices to offset the increased tax burden.
According to S&W's business owners sentiment survey, approximately 20 per cent of businesses have already reduced staff numbers as a direct consequence of the NICs changes that took effect in April.
Last year, the Chancellor announced in the autumn budget that employers' NICs would rise from 13.8 per cent to 15 per cent, while also increasing the threshold at which firms would start paying.
The increase coincided with a rise in the national living wage and reduced business rates relief for some firms.
The survey revealed that 33 per cent of business owners are still planning further staff reductions in response to the tax increase.
Firms said they were also looking to a series of other measures in order to offset the jump in their operating costs.
The survey of 500 UK business owners with turnovers of £5 million upwards also showed 46 per cent of those surveyed said they were planning further price increases as a result.
Meanwhile, 35 per cent of business owners said they planned to reduce staff hours and 29 per cent said they were looking at freezing pay.
It comes as firms highlighted higher commodity and energy costs, as well as disruption from wider macroeconomic uncertainty.
Claire Burden, partner in consulting at S&W, said: 'Businesses face considerable challenges in the current economic climate and many owners are having to make difficult decisions to stay afloat.
'Given that salaries represent a considerable proportion of the overall cost base for most businesses, it is to be expected that many are looking closely at headcounts in response to the increased national insurance costs.'
Alex Simpson, partner in employer solutions at S&W, said: 'For most businesses, the extent of the employers' NIC change was a surprise.
'We anticipated an increase in the employers' rate, but the additional reduction to the earnings threshold was not expected and is expected to have a dramatic impact over time.'
Government spokesman said: 'We are a pro-business government. We are protecting the smallest businesses from the employer national insurance rise, shielding 250,000 retail, hospitality and leisure business properties from paying full business rates and have capped corporation tax.
'We delivered a once-in-a-Parliament budget last year that took necessary decisions on tax to stabilise the public finances, including the NHS which has now seen waiting lists fall five months in a row.
'We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets.'