Isaac Delestre @TheIFS - Tax measures

© Institute for Fiscal Studies Increase in NICs, 2025-26 £1,600 £1,400 Full time minimum wage £1,200 Earnings: £22,000 Rise in employer NICs: £770 £1,000 £800 £600 Median earner £400 Earnings: £33,000Rise in employer NICs: £900 £200 £0 Gross earnings Note: Assumes employer already making full use of the employment allowance without the example employee. [...] © Institute for Fiscal Studies % increase in employer cost from NICs rise NICs rise on top of min wage rise Gross real terms labour cost, minimum wage workers £30,000 £25,000 Full-time worker 8% £20,000 Year on £15,000 year increase £10,000 11% £5,000 Part-time worker £0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Financial year beginning Note: Labour cost = salary + employer. [...] Source: OBR EFO October 2024, ONS, TAXBEN © Institute for Fiscal Studies Gross labour cost (2024-25 prices) NICs rise on top of min wage rise Gross real terms labour cost, minimum wage workers £30,000 £25,000 Full-time worker £20,000 £15,000 £10,000 £5,000 Part-time worker £0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Financial year beginning Note: Labour cost = salary + empl. [...] Source: OBR EFO October 2024, ONS, TAXBEN © Institute for Fiscal Studies Gross labour cost (2024-25 prices) National Insurance contributions From April 2025: Employer NICs increases from 13.8% to 15% Cut in the earnings threshold from £9,100 to £5,000 p.a. [...] Employment allowance increases from £5,000 to £10,500 Small employers hit least hard Bigger employers with lots of low paid staff hit hardest © Institute for Fiscal Studies National Insurance contributions Who bears the burden? OBR assumption (from 2026-27): 61% wages 15% prices 24% profits How will people & businesses respond? Reduce total work (fewer workers & fewer hours) Shift.