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A Tax Rise You Never Asked For, And A Sticking Plaster You're Meant To Say Thank You For

ended 21. July 2026

Last July the Government set out its Small Business Plan, and this month it published the one-year update on how it is going. Read them side by side on tax and something jars.

Both documents pat the Government on the back for doubling the Employment Allowance to £10,500, and the update's foreword insists the National Insurance rise is "not at the expense of the smallest firms". Say that to someone hunched over the payroll on a Friday night and watch their face. Because the same Government pushed employers' National Insurance from 13.8% to 15% in April 2025, and dropped the point where you start paying it from £9,100 down to £5,000. The Federation of Small Businesses works out that a firm with nine staff on the National Living Wage is now £25,850 a year worse off. That is a whole extra salary swallowed, and more small firms expect to shrink this year (35%) than grow (21%), climbing to 45% in hospitality.

Where do you actually stand?

  • Real support, or just handing back a corner of the money they took off you and calling it a gift?
  • If it came down to it, would you protect NHS funding or protect small employers? You cannot have both here.
  • Owners, be straight with us. Has this tax made you drop a hire, or look at AI and automation instead of a person?

Sources:

Small Business Plan and One Year On update, GOV.UK: https://www.gov.uk/government/publications/backing-your-business-our-plan-for-small-and-medium-sized-businesses

FSB cost warning via People Management: https://www.peoplemanagement.co.uk/article/1949065/increased-labour-costs-pushing-small-businesses-brink-fsb-warns

4 responses from the Newspage community

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Kate Underwood
Founder & Chief People Strategist at Kate Underwood HR and Training
Raise my National Insurance, gut the threshold, hand a bit back, then call it support. That's a mugger giving you your bus fare. Every owner I know has done the maths, and the maths says don't hire. You can't tax firms into growth. The Employment Allowance is a plaster on a wound the Treasury caused. Want us hiring? Stop taxing the jobs before they even exist.
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Graham Nicoll
Financial Planner, Chartered FCSI at NCL Wealth Partners
The debate around protecting small businesses versus funding the NHS creates a false choice. We need both. A strong NHS depends on a strong economy, and SMEs are vital through the jobs they create, the investment they make and the taxes they contribute.

For a small businesses employing people, higher National Insurance costs are not just a number on a spreadsheet. They influence decisions on recruitment, wage increases and investment. Some businesses may delay hiring or look to automation because the cost of employing people has increased.

The answer cannot be less NHS funding, but it also cannot be asking businesses to absorb ever-rising costs without considering the impact on growth.

The Government needs a long-term economic plan focused on productivity, investment and sustainable growth. Without a growing economy, short-term funding commitments for public services will become increasingly difficult to maintain.
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Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
Calling this “support” is like taking £100 from a business, handing £20 back and expecting applause. The Employment Allowance helps the smallest employers, but once a firm grows beyond that cushion, the 15% rate and £5,000 threshold punish every additional hire. A nine-person firm losing the equivalent of another salary does not feel supported; it freezes recruitment, cuts hours or asks whether software can replace the next employee. The NHS must be funded, but taxing jobs more heavily is a self-defeating way to do it: fewer hires and weaker growth ultimately mean a smaller tax base. This is not NHS versus small business. A thriving private sector pays for the NHS. Government should reverse the threshold cut, reduce the cost of hiring and fund public services through growth, reform and a broader tax base not a penalty attached to every new job.
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Editor
Harvey Dhillon
Founder & CEO at Zmartly
In April 2025 employers' National Insurance went up in two ways at once, and the second one did the damage. The rate rose from 13.8 per cent to 15 per cent. But the bigger blow was the point where you start paying it, which dropped from £9,100 a year to £5,000. So bosses now pay National Insurance on a much larger slice of every wage.

Doubling the Employment Allowance to £10,500 shields the smallest firms, and many pay nothing. The pain lands on the firm just above that line: a handful of staff, too big for full cover, too small to absorb it. For them this is a real cost, and it is why some are freezing hiring or looking at automation instead of a person.

If you employ people, do the sum now: check you are claiming the £10,500 allowance, then model next year's payroll at the new threshold before you commit to a hire.

Handing back a corner of the money is not the same as never taking it.