LONDON, APRIL 6, 2025: Looming changes to employers’ National Insurance Contributions (NICs) will hit mid-sized businesses hard, with businesses employing 20 or more people facing annual costs of £8,472, according to new analysis from Employment Hero.

The changes, which come into effect on Sunday April 6, were announced in October’s budget and have sparked concern among the business community.

Analysis by Employment Hero found that while smaller employers may benefit from the extension of Employment Allowance to £10,500, businesses with more than 8-10 employees will face significant additional costs, particularly in higher wage areas like London.

This follows employment trends identified in Employment Hero’s latest SmartMatch jobs report, which uses real-time data from 105,000 employees across UK SMEs. The report showed that employment has contracted by an average of 0.3% each month since the NIC hike was announced in October, including a 0.4% decline in February alone.

Kevin Fitzgerald, UK Managing Director of Employment Hero, commented:

“These NIC changes create a significant burden on growing businesses at exactly the wrong time. Our data clearly shows that employers have been preparing for these cost increases since the announcement by slowing hiring, particularly among younger workers who saw employment fall 1.8% in February alone.”

“While smaller businesses may benefit from the Employment Allowance extension, the cost rises quickly once you exceed the number of employees from 8 to 10. A medium-sized business with 20 or more employees will face more than £8,400 in additional annual costs – money that could otherwise be invested in growth, innovation or higher wages. Larger businesses are looking at almost £18,000 on average.”

“Regional differences are also stark: small businesses in London face costs more quickly due to higher average wages. You shouldn’t be punished for wanting to pay your staff enough to survive in an incredibly expensive city. Elsewhere, large businesses in the Midlands have the highest average costs, at almost £30,000.”