Employers’ NICs threshold is being reduced by 45%; there is a crisis coming and there is real fear across the business community
RHODA WILSON
In a tweet posted yesterday, Rupert Lowe, Member of Parliament for Great Yarmouth, highlighted the employee earnings threshold over which employers begin paying for National Insurance is being reduced to £5,000 per annum starting from the first day of the new tax year, 6 April 2025.
This change means that employers will start paying National Insurance (“NI”) on more of an employee’s earnings, as the threshold at which they begin to pay employer National Insurance contributions (“NICs”) will be significantly lower; the threshold is being reduced from employee earnings of £175 per week to £96 per week.
National Insurance is a tax on earnings that is paid by both employees (from their wages) and by employers (on top of the wages they pay out), as well as by the self-employed (from their trading profits).
The government are making four changes to employer NICs, all of which take effect at the start of the next tax year (6 April 2025): reducing the threshold for the employer’s contribution from £9,100 to £5,000, increasing the tax rate on employers’ contribution from 13.8% to 15%, increase the tax rate of employer contributions on taxable benefits-in-kind to 15% and increasing the employers Employment Allowance from £5,000 to £10,500.
Previously, the Employment Allowance was for small businesses whose NICs the previous year were less than £100,000. From April 2025 the £100,000 restriction will be removed, making the allowance available to all eligible businesses and charities regardless of their previous year’s National Insurance liabilities. The Employment Allowance is a set maximum amount that can be claimed in each tax year. From April 2025 the maximum that can be claimed by a business for the tax year is £10,500.
What the reduced threshold means for employers is that for someone earning £20,000 in 2025-2026, their employer will pay. £2,250 in NICs. That is an increase of £746 (or nearly 50%) over 2024-2025. For an employee earning $40,000 and £60,000 there will be an increase in employer NICs of 23% (£986) and 17.5% (£1,226) respectively. These increased NICs directly impact a business’ bottom line; they reduce a business’ profit or increase its loss. If, for example, a business cannot increase its customer prices to compensate, it could mean the end of the line.
The net revenue raised by these four changes is predicted to be just under £24 billion in 2025-26. If the Government is increasing its revenue, then it means employers are paying more by the same amount, irrespective of the increase in the Employment Allowance. And, as Mr. Lowe points out, it is the small businesses that will be hit the hardest.
As we read what Mr. Lowe has written below, let’s remind ourselves that the Chancellor, Rachel Reeves, claimed she was an economist – she lied, earning herself the nickname “Rachel from Accounts.” And the Secretary of State for Business and Trade, Jonathan Reynolds, claimed to be a solicitor – he also lied.
Twitter Post by Rupert Lowe MP
Anyone with proper business experience knows the impact that is coming in April from Labour’s job tax – sadly, that does not therefore include the Chancellor or the Business Secretary.
There is real fear across the business community, a crisis is coming and almost all politicians have stopped talking about it.
A lot of focus on the hike in NI, but not enough on the threshold change which is just as damaging. Going from a £9,100 threshold to £5,000 is brutal – it will drag countless lower-paid employees into the tax for businesses.
Those devising and implementing these rules, politicians and civil servants, do NOT understand how businesses operate.
We all know about the experience, or lack of it, from Reeves and Reynolds.
There are 306 “senior civil servants” in the Department for Business/Trade. How many have a directorship on Companies House? ONE.
ONE out of 306 has current experience. Just one.
These people do NOT understand what they are doing to business owners. They just don’t know or care. Their cosy jobs and pensions are safe.
These aren’t city fat cats they’re attacking. It’s normal, ordinary, decent men and women who are trying to find their way and provide for their families.
These changes WILL result in less investment, fewer pay rises and a weaker economy. That impacts EVERYONE.
Tax is ALREADY punishing. What’s Labour’s response? Hike it up even further.
I listen to them in Parliament – Reeves, Reynolds and the other drones. It’s worse up close. They don’t know what they are talking about. Honestly, it’s so bad.
I challenge Reeves/Reynolds to run a small business for just one week, in this climate. Let’s see how they get on making these decisions. They can’t deceive the cold hard numbers.
We should be hacking tax down – right across the board. Income, dividend, corporation.
Business is all about incentives. The five golden rules – what’s in it for me? Anyone who thinks otherwise is deluded.
What does Government need to do for business? Slash tax, cut burdensome regulation and get the hell out of our way.
Featured image: Keir Starmer, Jonathan Reynolds and Rachel Reeves. Source: ‘Labour’s manifesto is more ambitious than the Ming vase strategy suggests’, Labour List, 14 June 2024
This article (Employers’ NICs threshold is being reduced by 45%; there is a crisis coming and there is real fear across the business community) was created and published by The Expose and is republished here under “Fair Use” with attribution to the author Rhoda Wilson
See Related Article Below
In a little over 7 weeks, the Marxist UK Labour government will inflict a massive and fundamental tort on the country
PETER HALLIGAN
UK National Insurance is about to increase from 13.8% to 15%, and the threshold at which the new 15% rate kicks in has been reduced from £9,100 to £5,000.
Using Brave AI, here are more details:
The impact will be that the cost of employment will be applied to 33.8 million UK workers.
The average wage for UK workers is around £36,000 a year for a total country a wage bill of a little over £1.2 trillion pounds,
The National Insurance employment tax bill will increase from around £125.5 billion pounds to around £146.7 billion – an increase of £21.2 billion pounds = 17%.
Here is what National Insurance is supposed to cover:
“National Insurance in the UK is a tax system that funds government benefits programs such as the state pension, unemployment benefits, and other social programs.”
The proceeds from National Insurance (NI) have been mazed with overall taxation and spent. NI contributions are not segregated and collected in e “pot” for pensions, another allocated directly to unemployment every year and so on.
In other words, NI has become a general tax not a specific tax to meet a purpose,
Here is a definition of “tort”:
“A tort is a civil wrong that occurs when someone unfairly causes another person to suffer loss or harm, and it is not related to contractual disputes.”
On the face of it, a 17% increase in NI is not being met with an increase in pensions, unemployment or other benefits,
“In the United Kingdom, corporation tax receipts for the fiscal year 2023/24 amounted to approximately £83,903 million, including £2,992 million from offshore sources and £1,449 million from a bank surcharge.”
The upcoming increase in NI will increase UK corporate taxes by 25%. Companies will ether slash labour or increase prices or a mixture of both to compensate, This will include energy companies, so another 5% increase in energy prices is on the way – making ALL UK companies even less competitive and further impoverishing everyone I the country at the same time..
The increase in NI will impact every local authority in the country, who will raise rates by the maximum 5% permitted to compensate,
Unless pensions and unemployment/disability benefit payments are increased by the same amount as the 17% increase in employers Ni a fundamental tort against the entirety of the UK is about to be committed.
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Onwards!!!
This article (In a little over 7 weeks, the Marxist UK Labour government will inflict a massive and fundamental tort on the country) was created and published by Peter Halligan and is republished here under “Fair Use”
Featured image: notimerica.com (modified)
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