Low-wage women will be hardest hit by Reeves’ tax grab | Personal Finance | Finance

Low-paid women will be hit hardest by Rachel Reeves’ National Insurance tax grab, economists say.

The Chancellor increased National Insurance contributions for employers from 13.8 per cent to 15 per cent and also reduced the threshold at which businesses will start paying; This means any employee earning more than £5,000 will claim contributions from their employer.

Labor boasts about keeping its promise not to raise taxes on working people and says it has successfully protected them from income tax and national insurance increases.

But experts say a tax on jobs will only lead to lower wages.

In fact, the Office for Budget Responsibility (OBR) said 80 per cent of the National Insurance increase would be borne by workers through wage increases and reduced income loss.

The Institute for Fiscal Studies now predicts that women will be more affected than men.

A spokesman said: “On a proportional basis, employer NIC reforms have a greater impact on low earners than on medium or high earners.

“Women are more likely to be low-income, so it’s likely to affect women more than men in that context.”

The reduction in the threshold for an employer to start paying National Insurance from £9,100 to £5,000 per employee will make it more expensive, in percentage terms, to hire a lower-paid worker than a higher-paid worker.

According to IFS analysis, the changes would increase the cost of employing a low-wage worker by 5.4 percent, while the cost of an average-income worker would increase by 2.5 percent.

According to the Living Wage Foundation, nearly six in 10 low-wage jobs (59.5 percent) are held by women.

According to the Office for National Statistics, the biggest gender pay gap occurs between men and women aged 40 and over.
Helen Miller, deputy director of the IFS, said: “The way they are increasing Employer National Insurance Contributions applies more to people on low and middle incomes than you would get from other direct tax increases such as income tax.”

The minimum wage was also increased by 6.7 percent compared to April, to £12.21 per hour. As the gap between those under 21 and over begins to narrow, it will increase by 16 percent to £10 per hour for those in the 18-20 age group. – years old.

Ms Miller added: “If you put in the minimum wage, employment regulations, employment taxes, there is a danger of making employment a less attractive proposition for both sides of the market.”