The increase in employer national insurance (NI) contributions in the Autumn Budget has left business leaders feeling "tricked", analysts have said.

The Budget announced by the Chancellor earlier today will see that employer rates of NI will increase from 13.8% to 15% from April 2025, while the wage threshold for employers to pay NI was lowered from £9,100 to £5,000.

These changes were made as part of plans to fix the public finances, after Rachel Reeves said that the Government were left with a “£22bn black hole” from the Conservative administration.

Until 6 January, NI was split into 12% for employees and 13.8% for employers.

From April 2025, this will now be 8% for employees and 15% for employers.

Reeves said in the Budget statement: "We are asking business to contribute more and I know that there will be impacts of this measure felt beyond businesses.

"But in the circumstances that I have inherited, it is the right choice to make."

Pensions director at Aegon, Steven Cameron, commented: "Many employers may be feeling ‘tricked’ by the pre-election commitment not to raise NI. While later ‘clarified’ as just applying to employee NI, employers now face extra costs, and time will tell if this will filter down into lower pay increases or to less generous employee benefits in the future."

The move is expected to raise £25bn per year, covering more than the £40bn that is being targeting to cover day-to-day spending through tax revenues.

However, Reuters has reported that this move is expected to "fall entirely on the private sector".

Following the announcement, partner at head of platform and benefits at Barnett Waddingham, Julia Turney, said that the decision to increase employers’ NI contributions will be a "difficult pill to swallow" for UK businesses.

She added that it might be a "short-sighted move which could have serious implications for employee benefits".

Tax partner at Evelyn Partners, Toby Tallon, concluded: "These tax changes will leave many business owners questioning whether they should invest their time, energy, risk and money in starting and growing businesses. Many will face difficult dilemmas about whether it is worth taking on more staff, or indeed retaining the ones they currently have given that costs of employment will rise.

"In the run up to today we saw numerous reports of entrepreneurs planning to move abroad if the Budget didn’t deliver for them, with our own research of 500 business owners revealing that almost half would consider leaving the UK if the tax changes were clearly unfavourable.

"But perhaps the greater risk is inactivity. If the business owners lose confidence in the Government's economic or fiscal plans, they might decide that striving for that extra growth is not worth it if the rewards are more heavily taxed.”

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