Prime Minister Keir Starmer has given his biggest hint yet that a hike to the rate paid on employer National Insurance contributions is on the cards in the upcoming Autumn Budget.
Labour is under scrutiny over the rumoured tax rise due to its previous manifesto pledge to not raise rates on “working people”, including income tax, VAT or National Insurance contributions (NIC).
Critics have questioned whether this promise includes raising the tax burden on employers, who also make NICs on behalf of their workers.
During an interview with the BBC, the Prime Minister was asked: “Did your manifesto rule out increasing any rate of National Insurance, employers or employees?”
In response, Starmer said: “We were very clear in the manifesto that we wouldn’t be increasing tax on working people. And we expressly said that that was income tax, that was NICs, etc.”
However, when pressed on whether employers should expect to pay more following October 30’s Budget, the PM stopped short of rejecting the prospect of a hike to National Insurance.
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Starmer explained: “It’s very clear from the manifesto that what we were saying is we’re not going to raise tax for working people, and it wasn’t just the manifesto.
“We said it repeatedly in the campaign, and we intend to keep the promises that we made in our manifesto. I’m not going to reveal to you the details of the Budget.
“You know that that’s not possible at this stage. What I will say is, where we made promises in our manifesto, we will be keeping those promises.
“This is going to be a manifesto that is going to be tough. It’s going to be a budget that’s going to be tough, of course.
“But the focus will be on rebuilding our country, and ensuring that we get the growth we need in our economy and so it’s consistent with the summit we had yesterday.
“And this money that is now coming in which will be a real game changer for our country.”
His response mirrors similar statements from Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds who both refused to rule out higher taxes for businesses.
Reaction from private sector at the prospect of paying more National Insurance has been negative with City bosses slamming it as a “tax on jobs”.
Reynolds has also previously refused to rule out employers paying more in National Insurance
PA
Currently, employers make National Insurance contributions of up to 13.8 per cent on employee earnings.
It should be noted that salaries are paid into a pension tax free.
Following two consecutive rate cuts from the last Conservative Government, employees now pay National Insurance at eight per cent.
Anyone who is self-employed who pay class 4 National Insurance contributions does so a rate of six per cent if they earn between £12,570 and £50,270.
