Tax and pay hikes to see firms pay £2,300 more per low-wage worker this year

Get the free Morning Headlines email for news from our reporters across the world Sign up to our free Morning Headlines email Sign up to our free Morning Headlines email SIGN UP I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy UK businesses employing staff on minimum wage will see their costs jump by £2,367 per worker in 2025 due to pay increases and tax hikes announced in Rachel Reeves’ Budget, new analysis suggests. With the overall tax burden set to hit a new record high, the chancellor’s decision to increase the rate of national insurance paid by employers – and lower the threshold at which it is paid – will make it more expensive to employ lower-paid workers, according to a think-tank. The new Centre for Policy Studies analysis showed that, for the average full-time minimum wage worker, 21.3 per cent of the total labour cost will be spent on taxes this year. “By making it more expensive to employ people, the hikes in employer’s national insurance disproportionately affect the lowest paid or those who are looking to move back into work after being economically inactive.” After rising to a near-record high under the Conservatives, the overall tax burden is now set to reach new highs.