Martin Lewis says new National Insurance rule will hit 700,000 workers

Martin Lewis has issued a warning over a National Insurance change set to hit 700,000 workers after the Labour Party Budget. Mr Lewis, the ITV star, was back on the channel tonight with a Budget special from 8pm, as he discussed Labour Party Chancellor Rachel Reeves' landmark address.

The BBC Sounds podcast presenter warned the rate of National Insurance paid by firms and businesses will rise from 13.8% to 15% from April 2025, and the earnings threshold for when employers start paying National Insurance will also be lowered from £9,100 per year to £5,000.

It means businesses would be paying National Insurance on an extra £4,100 at the new rate from next year, Mr Lewis said. He explained: "So if your National Insurance bill is under £10,500 you won't pay any national insurance for your employees as a third date for smaller businesses out there.

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Martin noted that although this was a change for businesses, it would have an "indirect impact" on employees' pockets. He added: "Firms have to make a choice. Are they going to reduce their profits? Are they going to charge their customers more? or are they going to reduce future employee benefits and salaries?

"The official body on this said, they'll only be able to pass on around 60% of the cost to employees in the short term. So it's saying around 60% of this will actually be a cost met by employees, which is why it's fair to say this is an indirect tax rise on the employees then."

During the segment, an audience member asked: "I pay both employer National Insurance and employee National Insurance. Out of what I earn, has the budget reduced my take home pay?" Martin replied to the audience member and said: "Almost certainly, yes."

He explained: "There are around 700,000 people who work through umbrella companies. They're often freelancers or supply teachers and they are counted as PAYE workers for an agency, but they're sort of self employed."

Martin told viewers: "So being really honest, I said that there was an indirect impact for workers, but for the 700,000 umbrella company workers, there is a direct impact on the take home pay of working people."