Tax Increase to Add £2.5 Million to Staff Costs for NI’s Leading IT Firm

Russell Sloan, chief executive of Kainos, Northern Ireland’s largest IT company, stated that a tax increase introduced in the Westminster Budget is projected to increase the firm’s employment expenses by approximately £2.5 million. This announcement coincided with Kainos reporting half-year profits exceeding £38 million. The recent Budget included an increase in employer National Insurance contributions, which are levied on each employee’s salary. Effective from April, the contribution rate is set to increase from 13.8% to 15%, while the annual salary threshold for these payments will decrease from £9,100 to £5,000. Chancellor Rachel Reeves has indicated that these adjustments to National Insurance for businesses are expected to generate £25 billion, intended to support the funding of public services like the NHS. Kainos, headquartered in Belfast, has a workforce of approximately 2,500 individuals throughout the UK. The company’s expertise lies in assisting organizations with the digitization of their operations, with UK government departments being significant clients. In the previous year, the company’s total staff expenditures, encompassing salaries and other payroll-related costs, amounted to £261 million. Mr. Sloan commented that proposed increases in public spending are anticipated to ultimately benefit Kainos, considering the UK public sector represents a substantial client base. Revenue from the public sector within its digital services division reached £62 million during the first half of 2024, marking a 15% decrease compared to the corresponding period of the previous year. Mr. Sloan attributed this decline to a spending “hiatus” observed surrounding the UK general election and the period leading up to the budget. He expressed the company’s confidence in securing additional opportunities within this sector but stated he was “cautious about the timing of future growth as we await the government moving out of the delayed decision-making phase.” Furthermore, Kainos is pursuing its international expansion, having recently secured its initial contract in Australia. Mr. Sloan indicated that approximately twelve additional contracts are currently under consideration, and an executive from the European division is slated to relocate to Australia to manage operations in that region.