Employer national insurance contributions to rise

The first Labour Budget in 14 years was delivered in the House of Commons, with many crucial points set to be covered including rises in both tax and national insurance contributions.

UK Hospitality chief executive Kate Nicholls previously discussed the impact, that rising insurance costs may have on the hospitality sector.

She stated: “An increase would partially hammer​ sectors like hospitality, where staffing costs are the biggest business expense.” Nicholls also described hikes as “well above expectations” stressing that the budget today is “even more important” particularly for the hospitality sector.

Employers' currently pay national insurance rates of 13.8% on a worker's earnings above £175 per week. The Chancellor reported that employers' national insurance contributions will now be increased from 13.8% to 15%.

The Chancellor said: "We will increase the rate of employers' national insurance contributions increased by 1.2 percentage points to 15% from April 2025.” She continued, “We will reduce the secondary threshold level at which employers start paying national insurance on each employee's salary from £9,100 a year to £5,000."

She explained this will raise up to £25bn per year. This raise is predicted to come into effect at the end of the forecast period. She stated: “I know this is a difficult choice, I do not take this decision lightly.

We are asking businesses to contribute more and I know there will be impacts of this measure felt beyond businesses too." Reeves emphasised the need for businesses to contribute more, stressing the importance of protecting smaller businesses. Sacha Lord, one of three night time economy advisers in the UK, responded to the budget.

He stated: “This budget will put an undeniable toll on small businesses. While I appreciate growth must be the priority, businesses cannot absorb rising costs with such small margins and still be viable." Lord explained that he believed the hospitality sector needs "targeted support and dedicated representation as a single industry" in light of the heavier increases.

“Increases to employers' national insurance and the minimum wage will place even more strain on business owners. Increasing these costs without providing support for them to do is a broken model and will only ever lead to more businesses shutting their doors." Lord further stressed the vital need for aid throughout the hospitality sector, he states : "Before we reach the point of no return in the slow devastation of our once proud night culture."