The increase in National Insurance contributions is the biggest concern for small and medium-sized enterprises, research suggests.
A nationwide survey conducted by Towergate Insurance, aimed at identifying the key challenges facing SMEs in 2025, uncovered the following:
- 54% of respondents cited the rise in National Insurance contributions as their primary concern.
- 25% highlighted the increasing threat of cyberattacks and the need for stronger cybersecurity infrastructure.
- 20% pointed to ongoing difficulties in recruitment and retention, particularly in attracting skilled talent.
- 1% mentioned broader economic pressures, including inflation and supply chain disruption.
Higher employer contributions are raising payroll costs, forcing SMES to reconsider hiring plans, salary reviews, and even the security of existing roles, said the researchers.
As employers absorb higher NI costs, employees may experience fewer pay rises, limited benefits, and slower recruitment cycles—all of which affect morale and retention, warns the research. For SMEs competing with larger firms for talent, this shift could widen the gap in employer attractiveness, it says.
Richard Tuplin, CEO of Towergate Insurance, said:
“As a business, we understand the challenges that businesses of all shapes and sizes are facing, which were confirmed by responders in this survey. We understand that unexpected increased costs such as we saw with NI can create temptation to cut costs elsewhere and take risks you otherwise wouldn’t. As SMEs continue to grapple with these financial challenges, exploring solutions like salary sacrifice schemes and seeking professional advice can help businesses mitigate costs while still supporting their employees.”
