The cost of hiring in the uk is rising, here’s how to stay profitable.
If you’re running a business in the UK, you already know that hiring isn’t cheap—and it’s about to get even more expensive.
From April 2025, the UK government is implementing significant changes to National Insurance Contributions (NICs):
- Increase in Employer NIC Rate: The rate is increasing from 13.8% to 15%.
- Reduction in Secondary Threshold: The earnings threshold at which employers start paying NICs is decreasing from £9,100 to £5,000.
These changes mean employers will incur significantly higher payroll costs.
So, what does this mean for SMEs, startups, and growing businesses? And more importantly, how can you protect your bottom line without sacrificing growth?
Let’s break it down.
What the UK National Insurance increase means for your business.
Higher Employment Costs – Employers must now pay more in NICs per employee, reducing available budgets for hiring, operations, and expansion.
Tighter Profit Margins – Rising employment costs can squeeze profit margins, making it challenging to maintain profitability.
Hiring Challenges – Growing your team locally is becoming even less affordable, making it harder to attract the talent you need.
For SMEs and scaling businesses, this is a real financial challenge.
But there’s a smart way to manage rising employment costs…offshoring.
How offshoring helps you cut costs and stay competitive
- Save 50-70% on Labour Costs
By hiring offshore, you eliminate high NICs, pension contributions, and local employment expenses—while still accessing high-quality, skilled professionals.
- Access a Global Talent Pool
Struggling to find skilled workers in the UK? Offshoring lets you hire top-tier talent worldwide—without the premium price tag.
- Scale Faster Without Financial Strain
Instead of limiting your hiring due to high costs, offshoring allows you to scale efficiently, ensuring you can meet demand and grow profitably.
- No Hidden Costs, No Compliance Hassles
With Veritas’ Employer of Record (EOR) service, we handle payroll, compliance, and legal admin, so you don’t have to worry about international regulations.
How offshoring helps you cut costs and stay competitive
Let’s say you have a UK-based employee earning £40,000 per year.Dynamic Content
Before the NIC Increase (2024):
- Salary: £40,000
- Employer NICs (13.8%): £5,520
- Total Cost: £45,520
After the NIC Increase (2025):
- Salary: £40,000
- Employer NICs (15%): £6,000
- Total Cost: £46,000
Extra Cost Per Employee: £480 per year
Now, imagine you have 10 employees. That’s an additional £4,800 per year in employment taxes, without even increasing salaries.
With offshoring, you could reduce employment costs by up to 70%, allowing you to reinvest in growth, technology, and innovation.
Industry leaders speak out
Industry leaders have expressed concerns about the impact of the National Insurance hike:
- Mel Stride, a prominent Tory MP, warned that the increase “won’t raise a single penny” for public services and could harm business confidence. The Sun
- Kate Nicholls, Chief Executive of UK Hospitality, described the hike as a “tax on jobs,” stating: “Any increase in National Insurance contributions makes it harder to employ people and to take a risk on recruitment and expansion, because the costs of it will be so much higher.” GB News
- Charlie Nunn, Chief Executive of Lloyds Bank, added: “Anything that helps people continue to invest and take appropriate risk, we think, is really important. Anything that does the opposite would be a handbrake.” GB News
The bottom line? Offshoring is the smartest financial move in 2025.
If the rising cost of employment is putting pressure on your business, offshoring provides a clear, cost effective alternative.
Cut costs, not talent.
Hire globally, stay competitive.
Invest in growth—not excessive employment taxes.