The UK\u2019s construction industry is staring down the barrel of a fresh financial burden as employers\u2019 National Insurance Contributions (NICs) rise from 13.8% to 15% this April. Simultaneously, the threshold at which businesses start paying has been slashed from \u00a39,100 to \u00a35,000.<\/p>\n
The government\u2019s line? It\u2019s a responsible move to fix public finances. But construction SMEs see it differently; many are calling it a stealth tax on employment that could stall hiring, delay key projects and cause lasting damage to an already stretched industry.<\/p>\n
While large firms may absorb the costs, SMEs who make up 99% of the UK\u2019s construction sector will bear the brunt. These companies are already battling rising material costs, skills shortages and supply chain chaos. Now, they face an increased tax on every single job they create.<\/p>\n
\u201cThis isn\u2019t just another hike; it\u2019s a hammer blow to businesses doing their best to grow and keep people in work,\u201d said Catherine Storer, executive director at Essential Site Skills.<\/p>\n
\u201cWe\u2019re not asking for handouts. We\u2019re asking the government to stop punishing us for employing people.\u201d<\/p>\n
To soften the backlash, the government raised the Employment Allowance from \u00a35,000 to \u00a310,500 in April 2025 and removed previous eligibility caps. In theory, this should help small businesses absorb the NIC increase.<\/p>\n
In reality? It\u2019s not even close.<\/p>\n
The allowance only applies once per business, not per employee, and for labour-heavy industries like construction, it doesn\u2019t come close to covering the increase in employers\u2019 NICs.<\/p>\n
\u201cUnless you\u2019re running a business with a handful of part-timers, this allowance is little more than a soundbite,\u201d said Storer.<\/p>\n
\u201cIt hasn\u2019t mitigated the cost for any of the construction SMEs we work with. It\u2019s nowhere near enough.\u201d<\/p>\n
The industry is especially concerned about the knock-on effects of this increase. Firms may delay or cancel apprenticeship schemes, avoid taking on trainees, or even cut back their teams to manage costs. In an industry already struggling with workforce shortages, that\u2019s a disaster in the making.<\/p>\n
\u201cWe need new blood in construction, not barriers to entry,\u201d Storer said.<\/p>\n
\u201cThis policy pushes employers to think twice before offering someone a job. That\u2019s the wrong direction entirely.\u201d<\/p>\n