Speculation is growing that the UK government may be planning to raise national insurance contributions (NICs) for businesses, signalling a potential payroll tax hike.
Jonathan Reynolds, Secretary of State for Business and Trade, fuelled the assumption in a recent interview with Sky News, where he clarified that the Labour government’s commitment was specific to protecting employees from higher taxes, not businesses.
When asked about Labour’s election promise on NICs, Reynolds stated: “You knew that pledge was taxes on working people. It was specifically in the manifesto, a reference to employees.”
While Labour's election manifesto promised not to increase national insurance for workers, people familiar with the matter suggest the new government is considering raising NICs for businesses.
According to a Bloomberg source with knowledge of Labour’s fiscal planning, the increase for employers would not contradict the campaign pledges. Chancellor of the Exchequer Rachel Reeves is reportedly reviewing the prospect.
Prime Minister Keir Starmer has also hinted at the possibility of increasing business payroll taxes as the government seeks to fill a £22 billion deficit in public finances. When asked about the potential rise in NICs for businesses, Starmer reiterated Labour’s commitment not to raise taxes on working people.
One possible measure is taxing employer pension contributions, which could generate up to £16 billion annually, according to a report by pensions consultancy LCP.
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