Budget announcements always tend to put Larry the cat amongst the pigeons. Decisions about cuts and tax increases are not good news for anyone, and the most recent UK Autumn budget ‘24 announcement contained a particular blow to employers, as it confirmed that employer National Insurance Contributions (NICs) will rise from 13.8% to 15.05% by the 2025-26 tax year.
For many businesses, this increase represents a direct and considerable additional cost in employing staff. According to analysis by the Institute for Fiscal Studies (IFS), this change means an employer would pay an extra £1,340 per year in NICs for a UK developer on a salary of £70,000.
For companies with large IT teams, the cost increase could be substantial. Scaling IT talent has always been a strategic challenge, and rising NICs adds even more financial weight to decisions around team size and permanent hires.
Rising Costs and Evolved Teams’ Scalable Solution
As NICs continue to increase, companies may face difficult choices — particularly those relying on in-house software developers. For instance, an employer with a team of five developers each on a £70,000 salary would need to budget an additional £6,700 annually solely to cover these increased NICs.
This environment of rising employment costs makes flexible team models more attractive for businesses. Evolved Teams, a service by Evolved Ideas, provides scalable IT teams that can be adjusted up or down based on project requirements, eliminating the burden of NICs and providing immediate flexibility. This approach not only reduces the financial commitment associated with NICs but also allows companies to stay agile, adding skilled developers for specific projects and scaling back once they’re completed.
Flexibility Amid Economic Uncertainty
Economic shifts and policy changes add layers of risk to maintaining large, in-house teams. As businesses face growing financial pressures, flexible team structures become a valuable strategic option. Evolved Teams empowers companies to scale IT talent to meet demand, without the long-term costs and commitments of traditional hires.
Rethinking Traditional Team Models
While the NICs increase brings financial challenges, it also opens the door for companies to rethink traditional staffing models. The Evolved Teams service offers a pathway to stay competitive and responsive in a changing landscape. By leveraging flexible teams, businesses can sidestep rising NIC costs while keeping pace with their project needs.
To find out how we could help with team augmentation and reducing NIC's in your business, get in touch today.