New increased NIC burden for employers has added £28bn to their tax bill in the first year
New data shows that the cost of employers’ National Insurance Contributions (NIC) have jumped by £28bn or 24% in the last year (to March 31 2026) says UHY Hacker Young, the national accountancy group.
The main rate of Employers’ NIC increased on April 6 last year from 13.8% to 15% that has seen the bill for Employers rise from £116bn to £143.9bn in the last year.
Phil Kinzett-Evans of UHY Hacker Young explains that the annual increase in the NIC bill is far higher than the £24bn that the government had originally predicted. Phil Kinzett-Evans says only part of that increase can be attributable to wage inflation over the last year.
Whilst public sector employers are being provided £5bn in assistance from the government to pay for the NIC increase, the private sector is being left to deal with the problem by cutting staff or increasing prices. For example, £515m of support was provided to local government to pay for the increased NIC bill.
Adds Phil Kinzett-Evans: “The increase in NIC has caused real pain for UK businesses and I’m not sure that the policymakers recognised or admitted this when they increased the tax.”
“There have been a raft of redundancies announced across the hospitality and retail sector which have been directly attributed to the increase in NIC. In addition, the extra cost of NIC has slowed hiring.”
“It is also hitting employers at the same time as they face extra red tape and costs through the Employment Rights Act.”
“It’s now fairly widely recognised that the level of tax in the UK has got too high. Businesses need to see a sensible economic plan that sees a reduction in the business tax burden.”
Research by Reed found that 46% of businesses said that the tax increase would impact their hiring decisions.