“Horrow show” hike to NI contributions could add thousands to employer costs, lead to lower wages – Hargreaves Lansdown

In the lead up to the Autumn Budget, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown says a potential hike to employer National Insurance (NI) contributions could lead to lower wages due to the impact on costs.

Morrissey said: “The Budget is just over two weeks away and employers are gearing up for a Hallowe’en horror show if employer National Insurance rates get hiked.”

One option touted is that the headline rate of 13.8% on earnings above £175 per week could be increased, which Morrissey argued would push up wage bills.

Alternatively, NI could get levied on employer pension contributions – a cost of up to 13.8%, which she referred to as “damaging.”

Morrissey said: “Even if the Government didn’t opt to impose the whole 13.8% on contributions it would still hurt.

“If, for example, it added employer NICs of 2% on contributions, it would add £17.25 per year to the cost of paying into the pension of someone earning £35,000 per year and receiving the auto-enrolment minimum of 3% from their employer.

“Spread that across a couple of hundred employees then the figures get big fast.

“The concern is that employers may look to mitigate these costs with smaller wage increases, which will impact people’s ability to meet their day-to-day living costs.