The recent increase in National Insurance contributions poses a significant threat to the UK’s hiring rebound. The employment index from BDO showed a slight rise from 95.45 points in September to 96 points in October, marking a reversal after a 15-month decline. However, BDO cautioned that this improvement may be short-lived due to the Chancellor’s decision to raise the employer NICs rate from 13.8% to 15% and lower the payment threshold from £9,100 to £5,000. Kaley Crossthwaite, a partner at BDO, remarked: “The modest uptick in the employment index this month is encouraging… but we are still a long way from a full recovery.”

The Tony Blair Institute (TBI) has predicted that artificial intelligence (AI) could displace between 1m and 3m private sector jobs in the UK, but the overall rise in unemployment is expected to be in the low hundreds of thousands. The report, titled the Impact of AI on the Labour Market, suggests that while between 60,000 and 275,000 jobs may be lost annually at the peak of disruption, this figure is “relatively modest” compared to the average annual job losses of 450,000 over the past decade. TBI predicts that AI will create new roles, leading to a dynamic labour market. The deployment of AI could also boost GDP by up to 1% in the next five years, potentially rising to 6% by 2035. However, the report warns that the extent of job displacement will depend on future technological developments and government policies.

The boss of a major pension firm has warned that Labour’s hike in employer National Insurance contributions will prompt companies to reduce pension contributions, pushing more workers into a retirement crisis. Jamie Fiveash, the chief executive of Smart Pension, also said the increase will make it harder for the Government to increase minimum auto-enrolment payments because businesses will be unable to shoulder extra costs. Analysis by Phoenix reveals just one in seven workers is making large enough pension contributions to be able to maintain their living standards into retirement. Fiveash continued: “We’ve got a significant savings gap already and we are heading towards a crisis for people that think they’re saving enough and they’re not.”

Labour has taken significant steps towards implementing a four-day work week, following the Conservative Party’s previous opposition. Deputy Prime Minister Angela Rayner stated that a four-day week would be “no threat to the economy” and that she would not dictate to councils how they run their services. Meanwhile, Transport for London (TFL) has said it would work towards union proposals for a reduced work week for tube drivers in order to avoid strike action. Elsewhere, the Observer’s Joanna Partridge reports on a tightening of flexible working arrangements by private sector employers. But some experts warn that back-to-office mandates could leave companies with less diverse workforces.

More companies are considering salary sacrifice schemes to mitigate the impact of increased national insurance contributions, says Nick Bustin, employment tax director at Haysmacintyre.

More than 200 hospitality bosses have written to the Chancellor warning of drastic job cuts and closures in the wake of her increase in National Insurance contributions. Rachel Reeves last month announced an increase in NICs paid by employers from 13.8% to 15%. The threshold at which employers become liable to pay the tax also dropped from £9,100 to £5,000 per year. Among the signatories to the letter, organised by trade body UKHospitality, are JD Wetherspoon, Wagamama owner The Restaurant Group, Young’s, and Whitbread, which owns Premier Inn, the UK’s largest hotel chain. They said the changes would cost the sector an estimated £3.4bn annually and would prove regressive in their impact on lower earners and flexible working practices. Meanwhile, the Chief Secretary to the Treasury, Darren Jones, has suggested big businesses hit by the tax raid should “suck it up” for the sake of the NHS. He explained: “I think the public would recognise that bigger businesses are more able to burden some of the contributions that we need to make to the state.”

Rachel Reeves is set to announce plans to utilise a £354bn local government pension fund to stimulate the UK economy during her upcoming Mansion House speech. The Chancellor aims to consolidate fragmented local authority schemes, which represent the seventh-largest pension fund globally, and direct more funds into local projects. While Reeves has ruled out creating a single “super fund,” she will encourage consolidation to reduce costs and enhance investment in British infrastructure. Reeves believes that pension funds can achieve better returns by investing more in UK assets, although Treasury sources say she will not threaten tax subsidies to enforce this.

The UK could suffer a £22bn decline in exports if US President Donald Trump enforces a blanket 20% tariff on imports, according to the University of Sussex’s Centre for Inclusive Trade Policy (CITP). The economic repercussions could lead to a 0.8% reduction in UK economic output. Meanwhile, the IMF warned that a trade war could shrink the global economy by 7%.

Adrian Mardell, chief executive of Jaguar Land Rover (JLR), has expressed concerns regarding the potential impact of Donald Trump’s tariff plans and Rachel Reeves’s tax policies on the automotive giant. He stated: “Everybody hates taxes and tariffs. It’s not anything that we would wish for. But it’s the environment we are in.” JLR, which relies heavily on the US market, is preparing for tariffs that could increase the price of non-US goods by 10%. Additionally, Mardell highlighted the challenges posed by rising taxes in the UK, stating: “The Budget in the UK raised taxes a little bit and there are possibly even more serious issues coming at us.” JLR’s pre-tax profit fell 10% to £398m in the last quarter, but the company remains optimistic about production recovery in the second half of the year.

Stephen Yiu, head of the Blue Whale Growth Fund, has proposed a five-year tax break to encourage businesses to relocate to the UK. He believes this incentive would significantly alter the current landscape, preventing firms from opting for lower-tax jurisdictions like Ireland. Yiu stated: “A temporary five-year tax break for companies would change a lot and be cost-effective for the Government.” This suggestion comes in light of Chancellor Rachel Reeves’ recent £40bn tax increases, which have faced criticism from the business community.

Labour’s proposed changes to inheritance tax could impact over 100,000 farms in England, according to Conservative claims. The average farm, valued at £2.2m, would incur a tax bill of £140,000, forcing owners to work for two years without pay to cover the cost. Chancellor Rachel Reeves announced that farms worth over £1m would be taxed at 20%, although she contends that only a few farms exceeding £3m would be affected after allowances. However, the National Farmers’ Union (NFU) argues that two-thirds of farms could be impacted. Farmers are threatening protests, with Clive Bailye from The Farming Forum noting that some groups are considering drastic measures.

A lack of experienced staff and poor training has been blamed for a sharp decline in HMRC investigations into serious tax fraud and avoidance, which have fallen to a six-year low. The number of investigations fell from 1,091 in 2022-23 to 480 in 2023-24 but HMRC said it had “deliberately focused” its investigations in recent years towards the “highest-harm and highest-value fraud, which means the number of these enquiries will change from year-to-year based on changing risks.”

UK taxpayers facing financial difficulties will benefit from reduced penalties on late tax payments, effective from two key dates this month. HMRC has acknowledged the burden of “punitive interest rates” and will lower the total amount charged from 7.5% to 7.25% following the Bank of England’s recent base rate cut. However, analysts warn that rates will rise again in April 2025, potentially reaching 8.75%. Andrew Park, tax investigations partner at Price Bailey, stated: “The interest rates being charged on late tax are now a form of double punishment,” highlighting the challenges faced by those unable to pay on time. The number of penalties cancelled on appeal has surged by 70% in 2023/24.

The UK Government’s upcoming changes to inheritance tax (IHT) on pensions, effective from April 2027, are set to reshape retirement planning. Currently, pensions can be passed on without IHT, but the new rules will include pension pots in the estate’s value upon death. The Association of British Insurers reported a 46% increase in annuity purchases last year, totalling £5.2bn, as rising interest rates make them more attractive. Experts suggest that individuals aged 75 and over may particularly benefit from annuities, as they provide a guaranteed income for life, although they lack flexibility. Ed Monk from Fidelity highlighted that savers could combine annuities with investments for a balanced retirement income strategy.

Despite President Donald Trump’s campaign promise to end double taxation for Americans living abroad, experts at Blick Rothenberg warn that significant tax relief is unlikely. John Havard, a consultant at the firm, stated: “The economic cost of taxation for a US citizen living in the UK is unlikely to be materially reduced.” He explained that the UK tax rate often exceeds that of the US, making any potential reforms ineffective. Furthermore, gaining Congressional support for such changes poses a significant challenge, as they would require budget reconciliation, which could reduce revenue for the US Treasury.

The Sunday Times reports that Tesco is facing a £1bn bill for the Chancellor’s increase in national insurance over the course of this parliament. Sainsbury’s, Asda and Morrisons detailed last week that their combined bill would be £1.3bn over the period, leading to increased food prices. The Co-op also raised concerns, as have hundreds of hospitality businesses with the sector estimating nearly £14bn of extra costs will be incurred. Although Tesco may be able to absorb most of the £250m a year increase, its suppliers are less able to cope and will likely increase prices, sending up costs. Mel Stride, the shadow chancellor, has criticised Rachel Reeves for failing to publish a tax impact assessment for the rise in NICs, stating: “It is unacceptable that Labour are withholding this critical analysis.”

As the world considers the implications of President Trump’s policy on tariffs, Daniel Hannan suggests in the Sunday Telegraph that the move might push Labour to embrace Brexit. Hannan says he’s no advocate for tariffs and doubts whether Sir Keir Starmer’s government would want to alienate Brussels by seeking exemptions, but in order to protect Britain’s biggest export market, Labour should in fact go further and pursue a US-UK trade accord, even if that meant diverging further from EU standards. An editorial in the same paper agrees, stating that Labour should “put country ahead of party” and exert every effort in striking an agreement with the US. “The rewards for success are too great to ignore.” The commentary comes as the Chancellor pledges to promote free and open trade between nations in an upcoming Mansion House speech.