Labour’s jobs tax is set to cost the Scottish economy more than £2billion per year, new analysis reveals.
The National Insurance hike, which kicks in today (Sunday), has been widely criticised by business groups, and public and private sector employers, who will have to pick up the tab.
Calculations by the Scottish Conservatives estimate Rachel Reeves’ NI increase – which breaks Labour’s pre-election pledge – will cost Scottish employers an extra £2.114 billion per year, or £860 per worker.
Craig Hoy, the shadow secretary for finance and local government, said that, thanks to Labour’s “reckless instinct to tax, spend and borrow”, Scotland would face lower wages and growth.
He added that workers here face a “double whammy” from “two left-wing governments”, with Labour’s additional costs adding to the damage done by the SNP making Scotland the highest taxed part of the UK.
Scottish Conservative shadow cabinet secretary for finance and local government Craig Hoy said: “These figures show the devastating impact that Labour’s jobs tax will have on the economy – and, from today, Scottish firms and their employees will feel the direct effect in their pockets.
“The NI hike is not just another broken promise from Keir Starmer, it highlights Labour’s reckless instinct to tax, spend and borrow remains intact.
“This move will hit at least 170,000 employers with a crippling £2 billion burden in additional costs. It will hold down wages, prevent the creation of new jobs and stymie growth. That’s the last thing businesses need on top of the SNP’s failure to pass on rates relief.
“It’s a double whammy for Scottish workers, too, as they already pay the highest income tax in the UK and face eye-watering council tax rises under the SNP.
“Only the Scottish Conservatives are standing up against Scotland’s two left-wing governments and arguing for lower taxes, and an end to wasteful public spending and borrowing.”
Notes to editors:
Labour’s jobs tax will cost the Scottish economy £2.114 billion. As of February 2025, there were 2.459 million pay-rolled employees in Scotland. The median monthly pay for these employees was £2,466. Previously the employer would have had to pay a National Insurance contribution of £235.70 a month – or £2,828.40 a year. Under the new National Insurance rates imposed by the Labour Government, this contribution from employers will rise to £3,688.20. This average increase of £859.80 will end up costing Scottish employers £2.114 billion assuming the number of pay-rolled employees and their median salary stays constant. (Labour Market Trends Scotland: March 2025, 20 March 2025, link; Rates and thresholds for employers 2025 to 2026, 19 March 2025, link; National insurance rates and categories, Accessed 2 April 2025, link).
Over 170,000 employers in Scotland – the vast majority being businesses – could be impacted by Labour’s jobs tax. In 2024, there were a total of 174,310 employers in Scotland, meaning they could all be hit by Labour’s jobs tax if they meet the eligibility criteria. This figure is compiled of 118,935 companies, 30,410 sole proprietors, 16,620 partnerships, 8,090 non-profit making bodies and mutual associations, 225 central and local government bodies and 35 public corporations/nationalised bodies. This figure does not include unregistered businesses, so the true figure could be even higher (Labour Market Profile – Scotland, Accessed 2 April 2025, link).