Increases in National Insurance Contributions (NIC) and other government policies have contributed to costs increasing by 70% for an average company over the last 10 years.
A typical 50-person, £5 million turnover business now has £827,000 more costs than in 2016, according to data from the British Chambers of Commerce (BCC).
Around 27% of the decade’s total increases landed in the past two years. Between 2024 and 2026, the cost stack has risen by £224,572, with the employers’ NIC changes, announced in the 2024 Budget, adding £58,973 to the typical firm’s annual NIC bill.
From April 2025, the rate of employers’ NICs increased from 13.8% to 15%, and the threshold at which NICs become payable was cut from £9,100 to £5,000.
Other costs include increases in the minimum wage, business rates and compliance.
Speaking to City AM, David Bharier, deputy director at the BCC, said:
“This mounting cost burden has priced many firms out of growth.
“As a result, small and medium-sized enterprises’ investment has suffered. Many SMEs are caught in a risk-aversion cycle, where years of compounding cost pressures and geopolitical shocks have bred a defensive posture – a loss of confidence that the environment rewards taking productive risk.”