Budget: Employers' NI rises as tax take grows
Employers' National Insurance will rise from 13.8% to 15% in April but Employee National Insurance will remain unchanged, Chancellor Rachel Reeves announced in her Budget today.
The move was widely signposted before the Budget and will potentially raise £25bn.
The change was one of several taxation changes made by Ms Reeves who said taxes would rise by £40bn overall to plug black holes in the government's coffers and to pay compensation bills to Post Office sub-postmaster and tainted blood victims.
Business rate tax changes:
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Employers' NI will rise by 13.8% to 15% and will be liable on employee earnings above £5,000 from April, down from £9,100 at present.
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To soften the blow of the Employers NI rise, the employment allowance will increase from £5,000 to £10,500 which Ms Reeves said would exempt thousands of small firms - with typically four or fewer workers - from Employers' NI
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The tax paid by private equity investors on their share of profits from completed deals will go up from 28% to 32% from April
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The main rate of Corporation Tax, paid on taxable profits over £250,000, will stay at 25% until the next election
Personal taxation
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As promised in the Labour manifesto, rates of income tax and NI paid by employees, and VAT, will remain unchanged although VAT will be applied to private school fees from January
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Mrs Reeves ruled out extending the current income tax threshold freeze from 2028 to 2030, as some had predicted in a move designed to ease pensioners' concerns about paying much more tax
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Capital gains tax on profits from selling shares will rise from 10% to 18% and the higher rate will go up from 20% to 24%
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The Inheritance tax threshold freeze was extended by a further two years to 2030 and pension pots will be subject to IHT tax from 2027
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The ISA allowance will remain at £20,000 until April 2030.
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