UK Businesses Face Higher Costs with Tax and Wage Increases

New national insurance rates and a higher minimum wage could raise employment costs by over £2,300 per worker in 2025, sparking concerns about job losses.

• The cost of employing a full-time minimum wage worker in the UK will rise by £2,367 in 2025, according to analysis by the Centre for Policy Studies.
• The increase is driven by a rise in the national minimum wage from £11.44 to £12.21 per hour and an employer national insurance rate hike from 13.8% to 15%.
• The threshold for employer national insurance contributions will drop from £9,100 to £5,000, raising the tax burden on businesses employing low-wage workers.
• Major retailers, including Tesco, Sainsbury’s, Boots, and Next, warn that the changes will force them to raise prices and cut jobs.
• Smaller businesses may benefit from an increased employment allowance, exempting them from paying national insurance for some workers.

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