The scale of the tax burden placed on British businesses since the pandemic is highlighted by new HMRC data showing that social security revenues have risen by almost 40 per cent in just six years.
Figures from HM Revenue & Customs show that National Insurance contributions reached £198 billion in the year to February 2026, a significant increase on the £143 billion collected in the corresponding period of 2019-20. The increase amounts to an extra £55 billion a year flowing into the Treasury, with much of this coming directly from employers’ payrolls.
The trend has steepened significantly in the last twelve months. Revenue rose by 15 per cent in a single year after changes were introduced in April 2025 when the earnings limit at which NICs apply was reduced to £5,000 and the main employer rate increased to 15 per cent. Taken together, the measures announced by Rachel Reeves in her first budget in October 2024 represented a £25 billion annual tax rise directly targeted at employers.
Starting this month, companies will be under further cost pressure. The national minimum wage increased by 4.1 percent, an increase of 6.7 percent year-on-year. Business rates have also risen for clubs and restaurants, although pubs were partly spared the increase due to one of several policy U-turns by Sir Keir Starmer’s government.
Robert Salter, director of accountancy firm Blick Rothenberg, said the Chancellor’s claim that increases in employer NIC shares did not constitute a tax on working people was at odds with mainstream economic thinking. He argued that employers’ higher social security costs tend to suppress employment, a pattern he said was already evident in rising unemployment last year and was indirectly reflected in higher inflation for consumers.
The general budget situation offers little prospect of relief. According to the Office for Budget Responsibility, the UK’s total tax burden will reach a post-war peak of 38.5 per cent of GDP by 2030/31. Income tax revenue has risen even more than NICs, rising 69 per cent to £328bn since the start of the pandemic.
Frozen tax thresholds, a fiscal burden policy first introduced by Rishi Sunak in 2021 and since extended by Reeves until the end of the decade, have lured millions more earners into higher tax brackets. Taken as a whole, the freeze is on track to be one of the largest effective tax increases on individuals in modern British history.
Meanwhile, conflict in the Middle East has driven up oil and gas prices and increased input costs for producers. Industry surveys released last week showed manufacturing cost inflation accelerating at its fastest pace since 1992.
For businesses already struggling with higher wages, higher NICs and higher energy costs, the cumulative burden raises serious questions about the government’s ability to stimulate private sector growth, which it says is central to its economic strategy.
