Rachel Reeves raises employers' National Insurance contributions by 1.2% as Budget sees taxes rise by £40bn
30 October 2024, 13:33 | Updated: 30 October 2024, 14:35
The Chancellor has announced employers' National Insurance contributions are set to rise by 1.2% to 15% from April 2025.
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Speaking on Wednesday as part of Labour's first Budget, Rachel Reeves' NI announcement was higher than initially expected.
It means of the £40 billion set to be raised through taxes as part of the budget, £25bn will come from the rise in employers' national insurance contributions.
The Chancellor also confirmed that the level at which employers start paying national insurance on an employee's salary will fall from £9,100 per year to £5,000.
While delivering the first Labour budget since 2009, she said: "I know that this is a difficult choice. I do not take this decision lightly," she says.
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"We are asking business to contribute more, and I know that there will be impacts of this measure felt beyond businesses, too, as the [Office for Budget Responsibility] have set out today.
"But in the circumstances that I have inherited, it is the right choice to make," she insisted.
Speaking from parliament, Reeves announced this was not only the “first Budget in 14 years by a Labour chancellor" but "the first budget in our countries history to be delivered by a woman.”
The Chancellor labelled the rise a "difficult choice" as she addressed parliament.
"Let there be no ceiling on your ambition, your hopes and your dreams," she declared ahead of the announcement.
Adding she felt “pride” in the achievement, describing how “there is a responsibility” on her shoulders to abolish limitations for women and girls.
Reeves £40bn rise in taxes is now thought to be the largest single tax increase at any budget since 1993.
The '93 Budget, under John Major's government, saw Ken Clarke raise takes and cut spending by the largest figure seen since the aftermath of the Second World War.
