Is the Chancellor’s plan nudging businesses towards AI over employees?
From April 2025, UK businesses will face higher employer National Insurance (NI) contributions. For companies already feeling the squeeze from inflation, wage pressures and global competition, the question many are now asking is: Can we afford to keep growing our teams?
It’s not just a budgeting exercise. It’s a shift in strategy.
And it raises a serious question for Chancellor Rachel Reeves and her economic team: by increasing the cost of employing people, are you accelerating the uptake of AI solutions – not because it’s the right time, but because it’s the cheaper option?
Numbers don’t lie
Employer National Insurance is effectively a tax on jobs. When it rises, businesses must find that money somewhere. For some, that will mean halting recruitment. For others, it could mean rethinking how roles are delivered – and increasingly, that means automation and artificial intelligence.
AI platforms don’t come with payroll overheads, pensions, holiday entitlement or, crucially, NI contributions. The temptation to replace rather than recruit becomes stronger every time employment costs go up.
AI was always coming – but is this speeding it up?
Let’s be clear: AI adoption is not inherently bad. Used wisely, it can streamline operations, boost productivity and even create new roles. But the fear is that rising employment taxes may push businesses to adopt AI not as a considered strategy, but as a reactive cost-cutting measure.
When decisions are made based solely on financial pressures, there's a real risk that we skip the careful integration phase and jump straight to replacement.
That’s a loss for people, for company culture – and potentially for long-term productivity if the technology isn’t ready to take the reins.
Is the government thinking this through?
Chancellor Reeves has positioned herself as pro-business. But this policy raises doubts. Is the current approach to taxation aligned with how technology is changing the workplace? And is there a risk that short-term revenue gains from increased NI could be offset by reduced job creation, slower wage growth and a smaller overall tax base?
It’s not a simple equation – but it’s one that deserves more attention.
A message to government: Don’t tax people out of work
Employers understand the need to contribute to the public purse. But policy decisions must reflect the world we live in now – a world where AI is becoming part of the toolkit, but not yet a full substitute for people.
The government should be supporting a balanced transition, where technology and human talent work side-by-side. That means careful tax planning, support for upskilling, and an honest conversation about where the UK economy is heading.
At BBI Brandboost, we believe AI should be integrated with purpose – to enhance business offerings, not hollow them out. Whether it’s automating time-consuming tasks, improving customer interactions or powering new products, our AI solutions are designed to work alongside people, not in place of them.
If you're exploring where AI fits into your business strategy – and want to do it responsibly – we’re here to help.
Learn more about our approach at:
👉 AI Software Development – BBI Brandboost
👉 BBI AI Labs
Because while there may be no NI in AI, there should still be room for people.