Soaring National Insurance Bills Challenging For Businesses
A soaring National Insurance bill is adding to the challenges businesses face in attracting and retaining top talent, says independent consultancy Broadstone.
Analysis of government data by Broadstone, a leading employee benefits consultancy, reveals that the National Insurance Contributions (“NIC”) made by employers increased by 42% over the five-year period to March 2023.
The total cost of NIC to UK employers was £103bn in 2022/23 according to the latest HMRC tax receipts data, up from £72bn in 2017/18. This comes at a time when increasing inflation has also seen wage bills increase.
Sharp increases in NIC receipts in the past two years, 11% and 15% respectively, have coincided with wage increases of 7% per year.
Paul McGuckin, Head of EB Distribution at Broadstone, which has more than 500 specialist consultants and administrators in its ranks advising employers in the UK on the best way to attract and retain talent, says employers are looking to improve their broader benefits package to offset the salary and associated NIC increases.
Paul said: “Employers are facing a difficult environment, inflation is pushing up operating costs and salaries, at the same time as the tax burden is increasing. NIC costs a particularly punishing for businesses that are having margins squeezed as they are a tax on employment, not profit.”
“As a result, we are seeing lots of interest in salary exchange programmes that can help employers offer valued benefits, like healthcare or wellbeing initiatives, while reducing the cost of NICs for both them and their workforce. Engagement is key when it comes to uptake, so employers are often using technology like flexible benefits portals to manage the employee communications.”