National Insurance Hike Forces Nearly Half of UK Firms to Scale Back Hiring

[Social Media]

 

A sweeping rise in National Insurance (NI) contributions introduced by Chancellor Rachel Reeves is prompting almost half of UK companies to pull back on recruitment, according to new research. The move, which increases the rate of employer contributions from 13.8 per cent to 15 per cent, officially comes into effect this Sunday and is already reshaping hiring plans across the country.

 

In a survey conducted by recruitment firm Reed, 46 per cent of the 254 companies surveyed—representing over 260,000 employees—indicated they would cut recruitment due to the NI increase. The tax change, first announced in last October's Budget, is projected to bring in an additional £25 billion in employer taxes, but many firms say it could be the final straw in an already hostile economic environment.

 

The added burden arrives as businesses are also contending with higher minimum wages, rising business rates, and the cost of complying with updated workers' rights legislation. Many companies reported they had already postponed or cancelled hiring plans even before the rise officially began.

 

 

Concerns over the increase were widespread, with nearly two-thirds of firms voicing worries about the higher NI payments. On average, respondents estimated their annual profits would fall by 29 per cent due to the change.

 

 

The NI hike isn’t just freezing recruitment—it’s also triggering job losses. Sixteen per cent of the surveyed businesses said they had already begun making redundancies. Meanwhile, 19 per cent have delayed or scrapped planned salary reviews, and 22 per cent reported they were slashing departmental budgets to cope with the rising costs.

 

London appears to be bearing the brunt of the policy shift. Sixty per cent of firms in the capital reported that the NI increase was affecting their hiring decisions, compared to 38 per cent outside the city. Furthermore, 24 per cent of London businesses said they were already making redundancies, double the 12 per cent seen in other regions.

 

The recent rise in the national minimum wage, from £11.44 to £12.21 per hour for workers aged 21 and over, is compounding the situation. Twenty-six per cent of businesses said they had paused hiring because of the higher wage floor, while 35 per cent said it had significantly hampered their ability to recruit.

 

James Reed, chairman and CEO of the Reed Group, voiced concern about the direction of government policy. “Everyone understands there are difficult decisions to be made given the state of the public finances, but we warned when the increase in employers' National Insurance was announced it was a tax on jobs and so it has proved,” he said.

 

“The findings of our survey clearly demonstrate the impact and suggest the jobs market will remain under pressure. The hole this tax increase has made in a million company balance sheets is regrettable. These are tough times for companies that want to hire and expand and this will feed through into weaker economic growth.”

 

Based on a report by The Daily Mail  2025-04-07

 

 

[JonnyF]

Who would have thought that making it more expensive to hire people would result in less people being hired?

 

Obviously not Rachel from accounts and her budget for recession. 

[quake]

Labour, Forging ahead again.

Morning workers,  here's your P45, Bye.

 

[sandyf]

The National Insurance Act of 1946 was intended to provide safety nets for the working population. However successive government have decided it was a tool to suit their agenda, cut when votes required and raise when strapped for cash.

The system is now morally corrupt with jobs being used to fund gross mismanagement and a multitude of fraudsters and freeloaders.

[Purdey]

With fewer people able to find a job, dole money will be needed by more people. I don't understand how the government will cover the increase.

[roquefort]

Shouldn't she change the logo on her dispatch box?

[Alexjkr]

It is rather annoying when you see the the rate increase 13.8 to 15% but no mention of the reduced threshold which is the biggest deterrent. Many part tome workers who were previously exempt are now caught with employers and employees NICs. Then there is the frozen tax thresholds, but they haven't increase tax, like hell they have.

[roquefort]

3 hours ago, Alexjkr said:

It is rather annoying when you see the the rate increase 13.8 to 15% but no mention of the reduced threshold which is the biggest deterrent. Many part tome workers who were previously exempt are now caught with employers and employees NICs. Then there is the frozen tax thresholds, but they haven't increase tax, like hell they have.

It's the stealth taxes that governments of both stripes have used for years to feed the plebs the line "No increases in income tax". It's a blatant lie but as long as non-one calls them out they will keep getting away with it.