The British Chambers of Commerce (BCC) has warned that 8 in 10 UK companies will be forced to reconsider their future strategies when the proposed increase in employers’ national insurance contributions takes effect, bringing a “powder keg of costs” for businesses.
In a recent poll, 82 per cent of BCC-member companies said the higher tax burden will prompt them to revisit their operational plans, while 58 per cent expect a negative impact on recruitment and 54 per cent anticipate hiking their prices. More than a third (36 per cent) believe the rise will hold back investment.
Chancellor Rachel Reeves announced in October’s budget that employers’ national insurance contributions will go up by 1.2 percentage points to 15 per cent from April, alongside a reduction in the annual salary threshold at which businesses start paying national insurance, from £9,100 down to £5,000. Ministers forecast these moves will raise £25 billion a year by the end of the decade.
Reeves has defended the measure as “the right choice to make”, insisting that “successful businesses depend on successful schools, healthy businesses depend on a healthy NHS and a strong economy depends on strong public finances”.
However, corporate leaders, especially those in lower-margin sectors such as retail and hospitality, have criticised the rise, citing it as one more cost on top of reforms in workers’ rights and higher minimum wages. In a letter to Reeves in November, more than 70 high-profile retailers—including Tesco, Marks & Spencer, Sainsbury’s, Asda and Next—warned that rising costs would “inevitably” lead to job losses.
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