Brief
UK SMEs warn Budget of hiring strain from higher National Insurance
Business leaders argue the 15% National Insurance rate introduced in April 2025 is deterring SME recruitment ahead of Chancellor John Healey's budget.
By Felo News Desk · Published
Unemployment remains high in the United Kingdom while the number of job vacancies has fallen to a five‑year low, according to the Independent. Small and medium‑sized enterprises (SMEs) account for about 60% of all jobs, but many say the rise in employer National Insurance (NI) is preventing them from hiring more staff.
What happened
Since the Autumn Budget of October 2024, the NI rate for employers increased from 13.8% to 15% and the earnings threshold fell from £9,100 to £5,000 per year. The change took effect in April 2025. The Independent reports that these reforms mean every business now pays NI on staff earnings as low as £5,000, adding a significant cost burden for small firms.
What the reports add
The article cites Antonia Medlicott, founder of Investing Insiders, who says the new NI rate and lower threshold have made hiring "a staggering" expense for SMEs. She notes that the Employment Allowance was raised to £10,500, which helps the smallest firms, but once a business grows and hires beyond double‑digit staff numbers, the extra NI cost is felt "every penny of it".
What was said
Medlicott told the Independent, "We’re told to grow, to hire, to invest, and every time we do, the bill for doing the right thing gets bigger." She also emphasized that 99.2% of UK businesses are classified as small or micro, employing more than 13 million people and generating £1.9 trillion for the economy.
How it came about
The NI increase was introduced by former chancellor Rachel Reeves in the 2024 Autumn Budget and remains in force under current chancellor John Healey, who is expected to present the next Budget on 28 October. Business leaders are urging Healey to ease the tax burden on SMEs, but the Independent notes that any change is uncertain.
Key facts
- UK job vacancies are at their lowest level in five years. (independent.co.uk)
- Employer National Insurance rose to 15% in April 2025, down from a £9,100 earnings threshold to £5,000. (independent.co.uk)
- SMEs make up about 60% of UK jobs and 99.2% of businesses, employing over 13 million people. (independent.co.uk)
- Chancellor John Healey will deliver the next Budget on 28 October. (independent.co.uk)
Sources
- [1] independent.co.uk — originally reported as “The hidden problem behind UK job vacancies hitting a five-year low”
