Workers are facing a hit of up to £11,000 over the next five years due to Labour’s ‘jobs tax’, an analysis has found.
Chancellor Rachel Reeves‘ hike to employer National Insurance contributions (NICs), which she announced in October, is now in effect and is set to keep down wages.
From 6 April, the rate of employer NICs rose from 13.8 per cent to 15 per cent as the Treasury attempts to raise around £25billion a year.
The Chancellor has also cut the threshold at which firms become liable to pay NICs on an employees’ earnings.
Business chiefs have warned of a devastating impact from the tax rise, which they say is putting many firms at risk of closure due to hiked costs.
New research has also set out the ‘grim reality’ of the NICs rise on workers’ pay packets. It is estimated most of the tax hike will be passed on to employees through lower real wages.
A Liberal Democrat analysis found, on average, an employee would be worse off by roughly £2,900 by 2030. It also showed how workers are set to experience a hit of nearly £470 in the next year on average.
The analysis revealed that of the £25.7billion hit to firms from Ms Reeves’ ‘jobs tax’ in 2029/30, around £19.5billion would get passed on to workers.
Kensington and Chelsea was the worst impacted area in the country, with employees expecting to see an average hit of £10,800 in total by the end of the decade.

Chancellor Rachel Reeves ‘ hike to employer National Insurance contributions (NICs), which she announced in October, is now in effect and is set to keep down wages

An analysis found Kensington and Chelsea was the worst impacted area in the country, with employees expecting to see an average hit of £10,800 in total by the end of the decade
Some 60,043 payrolled employees in the London borough were forecast to be hit by a combined £649million due to the NICs rise over the next five years.
The next worst impacted area was the City of London, where employees were found to be facing an average hit £10,469 over the next five years.
This was followed by Westminster (£8,353), Camden (£6,781), and Elmbridge (£6,635).
Every local area will see employees at least £2,100 worse off by the end of the decade due to the NICs rise, the analysis found.
At last month’s Spring Statement, the Office for Budget Responsibility reported that 76 per cent of the rise in employer NICs would be passed down to workers through lower real wages.
Ahead of last July’s general election, Labour promised ‘not increase taxes on working people’.
Liberal Democrat MP Daisy Cooper, her party’s Treasury spokesperson, said: ‘The Chancellor is risking an epidemic of boarded up shop fronts and household finances taking another battering in the midst of a cost of living crisis.
‘These figures lay bare the grim reality of the Chancellor’s jobs tax. For the Government to pretend that this tax hike will not impact people’s pay packets is a complete deception.
‘It is employees and our high streets that will pay the price for this growth-crushing policy.
‘After years of Conservative economic vandalism, community high streets and family purse strings simply cannot bear the financial burden this Labour Government is proposing.
‘The Chancellor must immediately scrap her jobs tax and overhaul the broken business rates system to unleash the massive growth potential of our town centres.’