New National Insurance threshold to cost £1bn
More than 1.2m hospitality staff are not eligible for employer NICs

New analysis of the imminent National Insurance Contributions (NICs) threshold cut has revealed that the move from government will cost the hospitality sector £1bn.
Trade body UKHospitality has said that currently more than 1.2m hospitality staff are not eligible for employer NICs.
In April, that number will be reduced to just over 450,000 people, creating 774,000 more workers that will be newly eligible for employer NICs, costing hospitality operators £1bn in extra taxes.
This follows the chancellor Rachel Reeves' budget back in October 2024, when she announced that the threshold at which businesses start paying National Insurance on a workers' earnings will be lowered from £9,100 to £5,000.
"The scale of this change is unprecedented, bringing three-quarters of a million people into this employer tax for the first time, and the extent of the impact will be enormous," says Kate Nicholls, CEO of UKHospitality. "This tax is already forcing businesses to abandon investment, change recruitment plans, reduce headcounts and increase prices to cope with these cost increases."
What's the alternative?
Alternatives to the threshold reduction have been put forward to the government in the form of a new rate of employer NICs at 5%, rather than 15%, for earnings between £5,000 and £9,100, or a lower rate for lower-earning taxpayers who work part-time. Both solutions, UKHospitality says, would ensure lower earners aren’t hit the hardest.
"At a time when we saw hospitality as the biggest driver of economic growth in November, it’s completely misguided to be punishing a sector that has such growth potential," adds Nicholls.
"I hope the government can see the devastating impact this will have on businesses, team members and communities, and pause these changes to pursue alternative measures, in partnership with business."
UKHospitality has called on the government to implement a delay to the changes in order to pursue measures that won’t endanger businesses and jobs.