From 6 April 2025, significant changes are coming to Employer National Insurance Contributions (NICs) – and it’s important to be aware of how these updates could affect your payroll costs.
Here’s a clear breakdown of what’s changing:
1. Increase in Employer NIC Rate
The rate will rise from 13.8% to 15%. This means for every £1,000 of gross salary you pay above the threshold, you’ll now pay £150 instead of £138 in NICs.
2. Lower Threshold for NICs
Currently, employers start paying NICs on employees’ earnings above £9,100 per year. From April 2025, this threshold drops to £5,000, meaning NICs will apply to a larger portion of employee salaries.
Note: For employees under 21 or apprentices under 25, the threshold remains at £50,270. Other exceptions may apply.
3. Employment Allowance Doubles
The Employment Allowance is increasing from £5,000 to £10,500. This allowance can be used to reduce your total employer NIC bill, potentially offsetting the increased rate and lower threshold.
4. More Employers Can Now Claim the Allowance
Previously, only businesses with an employer NIC liability of less than £100,000 in the prior year could claim. From April 2025, this limit is removed – meaning more small and mid-sized businesses may qualify.
However, some restrictions still apply – such as only one allowance per group of connected businesses.
What This Means for You as a Small Business Owner
These changes mean higher NIC costs for most employers – but also greater opportunities to save through the increased and more accessible employment allowance.
If you’re unsure whether your business is eligible, or how these changes will affect your payroll, it’s worth reviewing your position before the new tax year starts.
Need Support?
If you’d like to talk through how the upcoming NIC changes might affect your business, or want hands-on support preparing for April 2025, we’re here to help.