As one year ends and another begins, there is a trend to look back on what has passed before looking to the future.
Spotify Wrapped and roundups of the best films of the year do the rounds on social media and form the basis of much office chatter.
HMRC seem capable of joining in the spirit by releasing data on the amount of tax collected so far in the current tax year.
Business owners will not be surprised that employer National Insurance Contributions (NICs) have hit record highs while other taxes are down.
With little relief in sight, what can businesses do to manage these growing bills?
Why are employer NICs so high?
For those business owners who feel that NICs are higher than usual, the data will confirm this feeling.
The amount of money collected through employer NICs is up by almost a quarter, as it has gone from £75.9 billion in the previous year to a staggering £93.7 billion in the period between April and November.
A change in rates and increasing wages are being blamed for this 23 per cent increase and it is suspected that employer NICs will grow more in the future.
The rate of employer NICs rose from 13.8 per cent to 15 per cent from April 2025 and allowances for lower-paid workers were halved.
Given the current trends, it is expected that the £116 billion collected in the 2024-25 tax year will be dwarfed by the amount collected in the current tax year.
Will employer NICs continue to increase?
Despite the 2025 Autumn Budget not increasing the NIC rates, it is expected that higher bills await business owners in the future.
This is mostly due to the increase in the National Minimum Wage and National Living Wage that will likely drive up wages across the board.
While those in employment may benefit from this rise, there is concern that rising employee costs will lead to reductions in staff numbers, thus contributing to the weakening job market and the growing unemployment rate.
Can anything be done to keep the NIC bill low?
Salary sacrifice has typically been an effective way of keeping employer NICs down but this is now only a short-term solution.
From April 2027, a £2,000 threshold will be placed on salary sacrifice, with any amount over that becoming subject to tax and NICs.
For business owners already under pressure, the NIC bill is likely to go up in 2027 due to the lack of effective mitigation strategies.
As such, it is vital that you seek expert advice to better manage your finances to brace for the increased burden.
We can help you plan and budget effectively so that the 2026 tax year is as manageable as possible.
Speak to our team today to face the next year with confidence.
