Chancellor’s NIC Hike: The Final Straw for Many Companies
On the 30th of October 2024, Chancellor Rachel Reeves rolled out a new plan in the Autumn Budget: employers will pay a higher rate of national insurance contributions (NIC). She hopes to raise £25 billion a year, but a voice from the halls of the National Audit Office is sounding the alarm.
Lord Morse’s Take: “Not All Big Businesses Have Broad Shoulders”
- “Employer NIC isn’t tied to how profitable a company is. So if a business already spends a large chunk of its budget on payroll, the extra cost will hit it right where it hurts.”
- “In sectors where workers make up a bigger slice of the pie—like construction or certain services—the rise turns into a crippling blow.”
- “If a firm has a huge turnover but thin margins, the new NIC can be downright insufferable.”
According to the Crossbench peer added: “This could be the straw that breaks the camel’s back for some.” He points out that the impact isn’t uniform across the UK: in places where local economies lean heavily on high‑payroll businesses—especially in Northern Ireland—the effect will feel like a double‑edged sword.
What About the Consumers?
Another Tenth-of-Party voice, Lord Morrow, says the higher NIC will ripple through the economy:
- The extra tax will be absorbed by businesses, but workers and families will feel the squeeze.
- In Northern Ireland, the NIC jump from 13.8% to 15% could hammer the agricultural sector, pushing up prices when families are already struggling.
In short, the government might be raising a big pot that many businesses can’t afford to pour into, and the money ends up on the ceiling rather than the cash register of the businesses themselves.
Bottom Line
It’s not rocket science—just a matter of please think this over before you turn our planet into a tax‑heavy circus!
