Reeves NIC and NLW hikes will see 25,000 businesses fold this year

The latest analysis from the Global Payroll Alliance (GPA) reveals that more than 16,300 businesses have collapsed since the government increased Employer National Insurance Contributions (NICs) and the National Living Wage (NLW).

The GPA examined company insolvency data for England and Wales* and found that since November 2024, when the government announced its changes to Employer NICs and the NLW, there have been 16,313 company insolvencies, including 2,661 compulsory liquidations and 12,506 voluntary liquidations.

This figure represents a 1.5% increase compared to the equivalent period prior to November 2024.

Based on current trends, the GPA now projects that by the end of 2025, England and Wales will have seen a total of 24,770 companies go bust, making it the second-worst year for business liquidations this decade.

Melanie Pizzey, CEO and Founder of the Global Payroll Alliance, said, “Labour’s policies around the NLW and NICs continue to prove disastrous and damaging for the nation’s businesses.

While not every single liquidation since November will be the result of these policies, it’s clear that increasing the financial strain for businesses that are still only finding their feet after the pandemic, is going to force many to go under.

Not only are these closures bad for the economy in the long run, each one results in immediate job losses, sending hundreds if not thousands of people in search of work. The problem is, these people are entering a stuffy job market due to the fact that businesses aren’t hiring as freely as they once were because the government’s NIC and NLW policies have made it too expensive to take on staff. And so the vicious cycle continues.”