The latest analysis from the Global Payroll Alliance (GPA) reveals that since last October’s Autumn Budget, the number of PAYE employees in the UK has fallen by more than 160,000 as businesses grapple with the staffing cost implications resulting from increased employer National Insurance Contributions (NICs).
As part of the Labour government’s Autumn Statement, it was announced that, from April 2025, employer NICs would be increased from a rate of 13.8% to 15%. As a result, the staffing cost for businesses large and small has increased significantly. To combat these rising expenses, businesses started cutting employee headcounts and scrapping future hiring plans ahead of the April deadline.
GPA’s new analysis reveals of PAYE government payroll data that since the Budget statement, the number of PAYE employees has fallen by -0.53%. While this might seem like a negligible decline, it actually means that the number of PAYE employees in the UK has been reduced by more than 163,000 (Oct 24 – July 25, latest available).
Some regions have seen greater reductions than others. London alone has seen a drop of -44,575, equivalent to a -1.01% decline in the local PAYE workforce.
In the North West, numbers have fallen by -22,398 (-0.67%), and in the West Midlands the decline totals -19,347 (-0.73%).
The number of PAYE workers has also fallen by more than -10,000 in Yorkshire & Humber (-17,139), the South East (-12,722), and East of England (-10,306).
Only one part of the UK has escaped this widespread decline and that’s Northern Ireland where the PAYE workforce has grown by 4,285 (0.53%).
Melanie Pizzey, CEO and founder of the Global Payroll Alliance, says: “A reduction of over 160,000 PAYE employees is far from negligible – it’s a clear signal that rising employment costs are reshaping workforce strategies across the UK. The increase in Employer National Insurance Contributions may have been intended to support public finances, but it has also added significant financial pressure on businesses already navigating inflation, wage growth, and economic uncertainty.”
This follows separate data released earlier this week by the Office for National Statistics, showing that the hospitality sector has been the hardest hit since the Budget, losing 84,000 jobs and accounting for nearly half (45%) of all job losses. This marks an increase of 13,000 job losses in just one month.
NFFF President Andrew Crook said in response to the findings: “These figures are extremely concerning but not surprising. Hospitality businesses, especially independent businesses are having to reduce operational hours and staffing levels to survive the high tax burden. We urge government to engage with as much of the sector as possible so they can formulate a plan that not only stops this decline but allows the sector to generate the much needed growth the economy urgently needs.”
