Rachel Reeves has hinted employers’ national insurance will rise next week in a tax raid on jobs.
The Chancellor said taxes paid by workers will not rise, leaving the door open to the levy paid by bosses on their workers’ wages.
“Let me be specific about what we promised in our manifesto. We said that because working people had already paid the burden under the last Government, we wouldn’t increase the main taxes working people pay – so income tax, all rates, national insurance and VAT. Those taxes that working people pay, we’re not increasing those taxes in the budget,” she said in an interview with BBC Radio 5 Live.
Asked what this meant for employers’ national insurance contributions, which is often referred to as a “jobs tax” Ms Reeves declined to rule out an increase.
“We set out in our manifesto the taxes that we would not be increasing. Obviously we do need to look at other taxes to make sure that the sums add up,” the Chancellor said.
“We do need to find additional money, but I have also been very clear that those taxes on working people, income tax, NI and VAT, will not be rising.”
It comes amid reports the Government is considering charging employers’ national insurance on businesses’ contributions to their workers’ pensions, potentially raising in the region of £10bn for the Exchequer.
If the Chancellor were to consider raising the rate of employer NI from its current level of 13.8pc, figures from HM Revenue and Customs indicate that a one percentage point increase would bring in almost £9bn per year for the Treasury.
Chris Sanger, a tax expert at EY, said a raid on employer NI contributions would push up the cost of employing workers and ultimately hit wages.
“The fact that you can change this [tax] straight away, and it affects the business and doesn’t immediately affect the employee, doesn’t stop this being a tax on labour,” he said.
“Ultimately, I think, as we see this work its way through, some of that will be absorbed by the business, and some of that will, no doubt, be absorbed by reducing the pay rises that would otherwise come to employees.”
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