Average worker in worst hit areas will lose out on £11,000 due to jobs tax

EMBARGO: Immediate Release

• Workers are facing a total hit of nearly £3,000 on average over the next five years due to the jobs tax
• Employees in the worst hit areas will have lost out to the tune of £10,800 by the end of the decade in lower real wages
• The Liberal Democrats have said the Chancellor “risks an epidemic of boarded up shop fronts” with household finances taking another “battering”

The rise in employers’ National Insurance has come into effect with employees in the worst hit areas facing an estimated hit of almost £11,000 on average by the end of the decade, as the jobs tax gets passed down to them as lower real wages, Liberal Democrat research has found.

At the Spring Statement, the OBR reported that 76% of the rise in employers' national insurance would be passed down to workers through lower real wages. The research found that this meant on average an employee would be worse off by roughly £2,900 by the end of the decade, with workers experiencing a hit of nearly £470 in the next year on average.

The analysis revealed that of the £25.7 billion annual hit from the jobs tax, around £19.5 billion a year will get passed on to workers by the end of the decade. Over the next five years, this amounts to roughly £89 billion passed to wages in total.

Kensington and Chelsea was the worst hit area where employees can expect to see an average tax hit of £10,800 in total by the end of the decade. This was followed by the City of London (£10,469) and Westminster (£8,353). Every local area will see employees at least £2,100 worse off by the end of the decade due to the jobs tax.

The Liberal Democrats have said the Chancellor risks “an epidemic of boarded up shop fronts” with her jobs tax. They called it a “growth-crushing” measure which is acting as a roadblock to the economic prosperity needed to rebuild public services and protect family finances.

The Party also called on the Chancellor to overhaul the broken business rates system to unleash the growth potential of high streets.

Liberal Democrat Treasury spokesperson, Daisy Cooper MP 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.”

ENDS

Notes to Editor:

See reporting by MailOnline here.

The research by the Liberal Democrats can be found here.

In its March 2025 Economic & Fiscal Outlook report, the OBR said: “we assumed that firms would pass on most, but not all, of the higher cost resulting from the increase to employer NICs to their employees via lower real wages…In 2025-26, …we assumed firms pass on 60 per cent of the higher costs to workers and consumers... Thereafter, we assumed, based on demand and supply elasticities for labour, that 76 per cent of the total cost is passed through to employees via lower real wages.” [OBR, March 2025 EFO, paragraph 3.52].

The research used the latest available ONS payroll data to allocate 76% of the National Insurance increase to each Local Authority, based on its share of the UK’s aggregate pay. The number of payrolled employees in each Local Authority was used to estimate the average tax hit in the area. [ONS: Earnings and employment from Pay As You Earn Real Time Information, seasonally adjusted].EMBARGO: Immediate Release

Average worker in worst hit areas will lose out on £11,000 due to jobs tax

• Workers are facing a total hit of nearly £3,000 on average over the next five years due to the jobs tax
• Employees in the worst hit areas will have lost out to the tune of £10,800 by the end of the decade in lower real wages
• The Liberal Democrats have said the Chancellor “risks an epidemic of boarded up shop fronts” with household finances taking another “battering”

The rise in employers’ National Insurance has come into effect with employees in the worst hit areas facing an estimated hit of almost £11,000 on average by the end of the decade, as the jobs tax gets passed down to them as lower real wages, Liberal Democrat research has found.

At the Spring Statement, the OBR reported that 76% of the rise in employers' national insurance would be passed down to workers through lower real wages. The research found that this meant on average an employee would be worse off by roughly £2,900 by the end of the decade, with workers experiencing a hit of nearly £470 in the next year on average.

The analysis revealed that of the £25.7 billion annual hit from the jobs tax, around £19.5 billion a year will get passed on to workers by the end of the decade. Over the next five years, this amounts to roughly £89 billion passed to wages in total.

Kensington and Chelsea was the worst hit area where employees can expect to see an average tax hit of £10,800 in total by the end of the decade. This was followed by the City of London (£10,469) and Westminster (£8,353). Every local area will see employees at least £2,100 worse off by the end of the decade due to the jobs tax.

The Liberal Democrats have said the Chancellor risks “an epidemic of boarded up shop fronts” with her jobs tax. They called it a “growth-crushing” measure which is acting as a roadblock to the economic prosperity needed to rebuild public services and protect family finances.

The Party also called on the Chancellor to overhaul the broken business rates system to unleash the growth potential of high streets.

Liberal Democrat Treasury spokesperson, Daisy Cooper MP 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.”

ENDS

Notes to Editor:

See reporting by MailOnline here.

The research by the Liberal Democrats can be found here.

In its March 2025 Economic & Fiscal Outlook report, the OBR said: “we assumed that firms would pass on most, but not all, of the higher cost resulting from the increase to employer NICs to their employees via lower real wages…In 2025-26, …we assumed firms pass on 60 per cent of the higher costs to workers and consumers... Thereafter, we assumed, based on demand and supply elasticities for labour, that 76 per cent of the total cost is passed through to employees via lower real wages.” [OBR, March 2025 EFO, paragraph 3.52].

The research used the latest available ONS payroll data to allocate 76% of the National Insurance increase to each Local Authority, based on its share of the UK’s aggregate pay. The number of payrolled employees in each Local Authority was used to estimate the average tax hit in the area. [ONS: Earnings and employment from Pay As You Earn Real Time Information, seasonally adjusted].