The NI changes are going to cost my organisation £1000 per employee

[flashbac]

The NI changes are going to cost my organisation on average £1000 per employee, The lowering of the threshold alone is going to cost around £600 extra per employee.

We are heavily regulated with fixed income. We're a not for profit. Our customers expectations are increasing. We are now most likely going to have to somehow reduce our headcount now, and payrises for April are going to be off the table.

Just shaking my head really. Our employees don't deserve this. Hard to see how this isn't a tax on jobs.

The lowering of the threshold also means employers have to pay for more workers, because part time salaries are now dragged into it.

A lot of people reading this won't care. All I can say is this NI increase will also affect you. just think about Local authorities, childcare providers and other services. Do you think it won't affect your Councils services/tax bills, to give one example?

(I'm not a Tory bot btw, before anyone starts accusing me of being one. I voted Remain, don't support the Tories at all, can't stand Boris and his cronies.)

I hear you OP - taxing businesses seems like an obvious solution but reality is that it directly affects consumers and the boots on the ground employees who feel it in their pay packets, progression and sadly job security.

RE: “The money for the services we want has to come from somewhere”

“services we want” apparently includes:

Office for Value for Money (I mean WTF?)
”GB Energy” (we all know this is just a black hole)
New Freeports to create 80k new jobs (but they won’t will they?)

How many billions is that bollocks going to swallow? Likewise the Covid task force - lots of meetings but how much money will they actually claw back vs how much it’s going to cost to run the whole thing?

Money to fix crumbling schools. Yes I remember the Blair/Brown school building program. Buildings made of cheese built by the lowest bidder and saddling councils with crippling PFI.

Money to build houses “with the private sector”. Yep that’s more PFI - what’s the con going to be with it this time?

Don’t forget those Labour donors who own private healthcare providers. I imagine they’re already lining up to step in and help the NHS with all that lovely new funding.

When that extra is coming from your employer and potentially going to cost you your hoped for but ultimately pathetic sub-inflation pay rise, or lead to your hours being cut when you’re already struggling or have you concerned your job will cease to exist entirely. Then yes. It’s going to feel shit.

People, including me, wouldn’t mind the extra if we thought this was actually going to lead to any improvement in services. However the feeling is that it won’t.

And we’ve another budget in April where I would bet some more painful measures will appear when “we’ve done the sums and…”

If I sound overly cynical then that’s what Blair-Brown then 14 years of Tories followed by this shower of self-interested weasels has done.

Meet the New boss. Same as the old boss but wearing red.

Sorry for the rant OP, I absolutely feel your despair and I wish I could make it better.

How much rpughly would a 1% increase on the basic rate of 20% and the higher rate of 40% have raised in total? I know Labour would never have opted for it because of their promises but it does seem like such a simple, transparent way to raise the funds this country needs. The way they have done it will likely still impact ordinary workers indirectly.

Who’s helps, but if you employ more than 3 or 4 people on minimum wage it’s no help at all unfortunately.

It would have been more economically literate to have introduced a higher rate for higher paid employees. Taking a very broad brush approach, those organisations employing lots of high paid employees are likely to be (a) larger, (b) much more profitable and (c) global and so more able to absorb / pass on the cost. The approach they have taken disproportionally impacts low margin business with large numbers of lower paid employees - hospitality, care, manufacturing, food production, charities. Exactly the businesses that employee large numbers of people and for whom these NI rises will impact most, either in lower payrises or fewer jobs. Or both.

We haven't had growth for nearly a decade now under the Tories. The country has been teetering on the brink of recession for years. What was being done, wasn't working. Maybe this won't work either but the definition of madness it to keep doing the same thing over and over again and expect different results.

People have had low wages for years. The average wage of £37K is low compared to comparable western economies, and not even accurate once you factor out all the HWIs. Plus it only went up to that in the last couple of years due to high inflation. The fact is that the UK is a low wage, high tax economy, with extremely poor public services. Maybe now we'll at least be a low wage, high tax economy with half-decent public services.

It’ll be an average salary of around £35k for the cost per employee to be around £1k I suspect.

People on here won’t like this as it comes from the Telegraph but this what I read this morning:

“more than half the £22 billion allocated to the NHS will be soaked up by pay and pension rises, analysis suggests.

The Chancellor announced on Wednesday that the two year boost for the Health Service represented the largest real-term growth in health spending since 2010, outside of the pandemic.

That includes an extra £10.4 billion for the NHS this year.

Treasury figures published alongside the budget show that £7.1 billion of NHS spending in England in 2024-25 will be spent on pay and pension increases.

Still more is set to be paid out to cover the same pay rise the following year.

Soon after Labour won the election Wes Streeting agreed a deal with the BMA…even as medics backed the deal they may strike again in future to win even greater gains in 2025-2026 “when Labour’s honeymoon period ends””.

With regard to the NI increase clearly the government is going to have to give the NHS the funds to cover the NI rise for all its employees. This money is going to come have to come from general taxation. So they have increased taxes on business and a not insubstantial amount of this money will go to cover increased payroll costs in the NHS in terms of NI. This is without the pay rises and pension increases. I dread to think what the bill for NHS pensions is.

I don’t believe other public sector bodies such as councils are to be covered in the same way so we will probably see more bankruptcies soon, charities affected obviously.

Are there many European countries where so many people pay so much for housing and are so dependent on food banks to eat?

I do think ultimately we all need to pay more tax but we need more affordable housing and higher incomes for the poorest sections of society before that's possible because there are a lot of people out there on the bones of their arse.

I'm at a loss, so many posters who were keen to drive down pay for nurses, teachers, military, train drivers, junior Doctors etc and who are against NMW rises, now seem to be saying that lower pay is a BAD thing.

I even had to listen to a tory shadow minister say this morning that Reeves budget was worse for Govt borrowing than Liz Trusses, which is odd because 10yr gilts went from 1.8% to 4.6% in a few days and they have never recovered back to what they were either, no where near it.

Today, they are just v slightly higher than they were 6 months ago (dropping today) no screams of impending doom then.... all was fine and dandy in Toryland.

Absolutely this. Do not blame the current administration- blame the tories. It was 14 years of their corrupt practices that led to this.

@AnonymousBleep

Ok, so that's one example you agree with, good.

Now let me give you some other examples. Here's one for a start: A mid size engineering firm makes a specialised part which is shipped all over the World, based on specialised knowledge and reputation gained over several decades. It's facing significant competition from far eastern manufactures with lower staffing costs than the UK so it's margins are extremely tight. The NI raise means the firm will have to put up the cost of this part by a small amount which will make it uncompetitive, so it decides to sell its goodwill and knowedge to a far eastern manufacturer.

This has been going on for years, and so where do YOU think the money is coming from if we can't export things to other countries because it's too expensive to employ staff?

@AnonymousBleep

We haven't had growth for nearly a decade now under the Tories

Leading economics agreed after the 2008 crash that it would take a decade of stagnation to recover. Hence austerity. Don't forget Ed Milibrand also "promised" austerity in his GE campaign a decade or more ago.

There was never going to be any growth for that decade.

Then came Covid. The costs and effects of Covid likewise cause a decade of stagnation.

Doesn't really matter which party are in power we've had a decade of stagnation due to the 2008 crash and will now have another decade of stagnation due to Covid.

People have been saying that the NHS doesn't need more money and just needs reorganising for years. Loads of money has been lost in the past due to NHS reorganisation particularly as it always involves paying managers and breauucrats money to do the reorganisation. Not to mention all the costs of making people redundant only for them to be reemployed a couple of years later by the NHS. And then the next party comes along and reorganises it back to how it was. And healthcare professionals often end up having to spend time providing them with information and working around new inefficient systems rather than actually treating patients.

Can you show your workings for that?

I guess it's the lowering of the floor rather than the headline 1.2% change in the rate that's making the difference.

I disagree with that, and there are plenty of economists who've bewailed the lack of growth over the past decade. The economy was recovering from the global crash before Osborne introduced the ideological public-services-annihilating disaster that was 'austerity'. Keeping public sector wages low for over a decade kept downwards pressure on the private sector too which is one of the reasons why we're so far behind the rest of Europe, and which was only slightly offset by increasing the tax thresholds each year. Net result = low wages, low productivity, low growth.

I don't think a decade of stagnation due to covid is set in stone either.

No opposition party supported Austerity after 2015.

No other EU country continued with Austerity & they saw growth resume.

Austerity is the equivalent of not maintaining ones house, the roof leaks, rafters rot, damp increases - subsequent repairs then cost far far more than if we'd kept on top of the mtce.

Hence we have £billions of repair backlogs on our roads and in our Schools/Hospitals.

Money which now has to be found.

Of course it's a tax on jobs. Where would you prefer to get tax from?
Personally, I would have preferred to pay more income tax and keep my job, rather than risk likely redundancy.

This is what I got from sticking the calculation into ChatGPT:

1. Identify the increase in contributions: The employer is paying £1000 more due to a 1.2% rise in the National Insurance rate.
2. Determine the salary: Let the salary be ( S ).
3. Consider the new threshold: National Insurance is now paid on earnings over £5,000 instead of £9,000.

The increase in contributions is given by: [ \text{Increase} = (S - 5000) \times \frac{1.2}{100} ] Given that the increase is £1000: [ (S - 5000) \times \frac{1.2}{100} = 1000 ] Solving for ( S ): [ S - 5000 = \frac{1000 \times 100}{1.2} ] [ S - 5000 = \frac{100000}{1.2} ] [ S - 5000 = 83333.33 ] [ S = 83333.33 + 5000 ] [ S = 88333.33 ] So, the salary of the employee is approximately £88,333.

The maths isn’t that difficult…

Previously employers NI on £35k was (£35,000 - £9,100) x 13.8% = £3,574
Now it will be (£35,000 - £5,000) x 15% = £4,500
Increase £926.

And that’s why you shouldn’t rely on chat GPT without some knowledge of the subject 😂😂

edited to add, not even the subject. Just maths.

I'm no tax expert but that does look quite high. Maybe AI won't be taking over the planet just yet....

Thanks, that confirms what I suspected; it's lowering the start point that's doing the heavy lifting rather than the 1.2% increase in the headline rate.

Initially I just used the 1.2% and got to the same £80+k as AI did.

Yes, selling a business is nigh on impossible these days. My friend’s husband had to put his company in liquidation recently as needed to retire due to ill health.

Indeed…it’s an unashamed increase in tax on employment, impacting low margin organisations with large numbers of employees the most.

Your response below to redundancies and lower pay was that you were ok with it, but how do they help growth?

UK manufacturing and farming.

Why on earth would they want to impact two things that provide a certain level of security?

Mumsnetters are constantly going on about how brilliant Germany is and manufacturing and farming are two highly protected industries there.