UK Payroll Surge: PAYE Tax Hits £252 bn & Employer NICs Storm Toward £114 bn
New data from the Global Payroll Association (GPA) shows that 2024 was a whirlwind of numbers for British businesses and workers alike. The UK’s PAYE system has just tasted a new high, and employers are bracing for higher costs next year.
2024: The Tax Landscape
- Income tax via PAYE: £252 bn – a solid +8.6% jump, marking the fourth straight year of growth.
- PAYE’s share of all UK income tax: 86.6% – up from 84.3% in 2021.
- National Insurance: Employees contributed £51 bn (down 18.8% from 2023).
- Employer NICs: £114 bn – a +6.8% rise, the highest in a decade and the ninth consecutive increase since 2015.
- Total tax receipts to HMRC: £849 bn.
Why the Numbers Matter for Businesses
The new government rules will bump up employer NIC rates from 13.8% to 15% starting April 2025. That’s a direct hit on staffing costs, and the impact is already felt. Big names like Sainsbury’s have announced huge cuts to keep prices stable, while smaller firms risk crunching under the weight of the extra tax.
Melanie Pizzey on the Crunching Reality
“The state’s grab of PAYE contributions keeps climbing since 2013, with a brief pause in 2020. Now employers are being asked to foot the biggest NIC bill in the last decade,” Pizzey explains. “This means higher heads‑count expenses, job cuts, salary freezes, and in worst cases, businesses folding.”
Takeaway
With PAYE tax rising and employer NICs set to jump next year, UK businesses—especially SMEs—must scramble for innovative cost‑controls or face a tough road ahead.
