Tax and pay hikes to see UK firms pay £2,300 more per low-wage worker in 2025
Share:
Tax burden set to hit new record high, analysis suggests. UK businesses employing staff on minimum wage will see their costs jump by £2,367 per worker in 2025 due to pay increases and tax hikes announced in Rachel Reeves’ Budget, new analysis suggests.
![[Chancellor of the Exchequer Rachel Reeves poses outside 11 Downing Street]](https://static.independent.co.uk/2024/12/31/22/263d33291c2775706f23f46bd5d8aa8aY29udGVudHNlYXJjaGFwaSwxNzM1NzM0MDgx-2.78023123.jpg)
With the overall tax burden set to hit a new record high, the chancellor’s decision to increase the rate of national insurance paid by employers – and lower the threshold at which it is paid – will make it more expensive to employ lower-paid workers, according to a think-tank.
Defending the largest tax-raising measure in its first Budget, the new Labour government said the changes would raise an additional £23bn for the Treasury in 2025, which would help to fund the NHS and contributory benefits such as the state pension. But the move has angered some businesses, with some of the country’s biggest retailers warning that job losses are unavoidable as a result of the tax increases.
New analysis by the Centre for Policy Studies now suggests that it will cost an average of £24,806 to employ someone over 21 earning the minimum wage, which amounts to £2,367 more per person than in 2024. That will partly be driven by the hourly national minimum wage rising from £11.44 to £12.21 from April – amounting to a £1,400 annual pay rise for a full-time worker on the national living wage.
