Employers paid a record £67bn in National Insurance on their workers’ pay packets in the seven months before Rachel Reeves jacked up the so-called “jobs tax” in her Budget at the end of October.
The haul of £66.8bn between April and October represents a jump of almost 6pc from the £63bn which the Treasury received in the same period of the previous year, figures from HM Revenue and Customs show.
By contrast employee National Insurance contributions, which are shown in workers’ pay packets, fell to £28bn, down by almost one-quarter on the year, after the Conservatives cut the rate twice in their final year of office.
It means that the vast majority of National Insurance is already being paid by employers, with the share set to rise further next year following the Budget.
Damon Hopkins at financial services consultancy Broadstone, said the tax figures show employers’ contributions already “far exceeding previous tax years and highlighting just how lucrative national insurance is likely to become for the Treasury”.
The Chancellor’s tax raid takes effect at the start of the new financial year in April 2025.
From that point employers will pay a rate of 15pc – up from 13.8pc – and the salary threshold at which the tax kicks in will fall to £5,000, down from £9,100 currently.
It means businesses which employ lower-paid workers are set to be hit particularly hard by the tax increase.
“With the exception of very small businesses, these increased costs are likely to force businesses to review their approach to hiring, pay and benefits and perhaps even wider operating costs,” said Mr Hopkins.
“Balancing these new cost pressures while supporting employees through what is still a fragile macroeconomic environment and without compromising retention or productivity will be a challenge.”
Andrew Bailey, Governor of the Bank of England, has cautioned that employers will either have to absorb the cost in lower profits, or will pass it on to customers in the form of higher prices, or workers in lower wages or fewer jobs.
At the time of the Budget last month, the Office for Budget Responsibility predicted the NIC raid would cost around 50,000 jobs.
Other analysts have predicted bigger losses. Sanjay Raja, economist at Deutsche Bank, estimates the economy will miss out on 100,000 jobs, either as workers lose their positions, or businesses cancel plans to hire more staff.
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