The new increase in Employers' National Insurance (NI), effective from 6th April 2025, raises rates from 13.8% to 15% while lowering the pay threshold. This change significantly impacts businesses that previously banned freelance workers in light of the off-payroll working rules (IR35). Qdos emphasizes that the tax hike necessitates revisiting strategies, as many firms transferred contractors to payrolls, incurring higher costs. This response to shifting tax liabilities has led to a burdensome financial strain on companies now required to reassess these blanket bans on freelancers.
"Many businesses have been counting the cost of blanket contractor bans in response to the off-payroll rules - a set of tax rules that are inextricably linked to Employers' NI."
"The increase must become a catalyst for a rethink in approach among businesses that have chosen to ban freelance workers, as it significantly raises their operational costs."
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