City lawyers and other self-employed partners at businesses including top accountancy and private equity firms have been spared the increases to national insurance contributions announced in October’s budget.

Labour announces company 'exemptions' from National Insurance contributions increase

by · Birmingham Live

City firms will escape paying national insurance rises from the new Labour Party government. City lawyers and other self-employed partners at businesses including top accountancy and private equity firms have been spared the increases to national insurance contributions announced in October’s budget.

Members of limited liability partnerships (LLPs) were not included in Rachel Reeves’ changes to employer national insurance contributions (NICs). Tony Williams, principal at the legal consultancy Jomati, said he estimated that such a move could have raised “into the billions”.

Employees will not pay more directly, Reeves says, but she will raise employers’ national insurance contributions by 1.2 percentage points to 15% from April 2025. The government will also reduce a secondary threshold when contributions are due from £9,100 to £5,000. Those measures will raise £25bn a year by the end of the forecast period, the biggest single tax raising measure in the budget.

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“When you think about the number of firms in the City and others where people are earning significantly over £1m, it could be £2m or £3m,” said Williams. Reeves told the Confederation of British Industry (CBI) annual conference in Westminster that no one has offered a better solution to the challenging situation left behind by the previous, Conservative Party government.

“I have heard lots of responses to the government’s first budget but I have heard no alternatives,” she said. “We have asked businesses and the wealthiest to contribute more. I know those choices will have an impact. But I stand by those choices as the right choices for our country: investment to fix the NHS and rebuild Britain, while ensuring working people don’t face higher taxes in their payslips.”

A survey of 266 businesses carried out by the CBI to assess the impact of the budget found that half are considering cutting jobs and almost two-thirds are rethinking plans to hire new staff.