British employers have absorbed a £28 billion increase in their National Insurance bill over the past year, according to figures compiled by accountancy group UHY Hacker Young — £4 billion more than the Treasury projected.
The total cost of employers’ NICs climbed 24 percent in the 12 months to March 2026, rising from £116 billion to £143.9 billion. The jump follows the Chancellor’s decision to raise the main rate from 13.8 percent to 15 percent on April 6 last year, a policy framed as a targeted move to strengthen public finances but criticized by business groups as a stealth levy on employment.
Phil Kinzett-Evans, partner at UHY Hacker Young, said the overshoot could not be attributed to wage inflation alone. “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,” he said.
While the public sector received roughly £5 billion in funding to offset the higher charge — including £515 million ring-fenced for local authorities — private employers have had to absorb the impact themselves. Many have responded by raising prices for customers or cutting headcount.
The labour market is already showing signs of strain. Several high-profile redundancy announcements in hospitality and retail have directly cited the NIC rise, and hiring activity has slowed as firms reconsider new recruitment. Research by Reed found 46 percent of businesses said the tax increase would influence their hiring decisions.
Kinzett-Evans noted the timing compounded the problem, arriving as employers prepare for additional compliance costs under the Employment Rights Act. “It’s now fairly widely recognised that the level of tax in the UK has got too high,” he said. “Businesses need to see a sensible economic plan that sees a reduction in the business tax burden.”
With business groups pressing the Chancellor to ease the squeeze ahead of the next fiscal event, the question of who ultimately bears the cost — shareholders, staff or consumers — is shaping up as a central economic debate.