The employer National Insurance rise announced at the Autumn Budget 2024 took effect on 6 April 2025, the start of the new tax year. The changes are made by the National Insurance Contributions (Secondary Class 1 Contributions) Act 2025, which received Royal Assent on 3 April 2025, and apply to every employer with a secondary Class 1 National Insurance contributions (NICs) liability.
Corporate INTL Newsroom · Employment & Labour
Employer National Insurance Rise to 15% Takes Effect Across the UK
By The Corporate INTL Newsroom · 7 April 2025
What has changed
According to the government's policy paper, published on 13 November 2024, three changes take effect together:
- Higher rate: the secondary Class 1 NICs rate paid by employers rises from 13.8% to 15%.
- Lower threshold: the Secondary Threshold, the level of earnings above which employers start paying NICs on an employee's pay, falls from GBP 9,100 to GBP 5,000 a year. It is fixed at that level until 5 April 2028 and will then rise in line with the Consumer Prices Index.
- Bigger Employment Allowance: the maximum Employment Allowance increases from GBP 5,000 to GBP 10,500, and the restriction that excluded employers whose secondary Class 1 NICs liability exceeded GBP 100,000 in the previous tax year is removed.
Other employer thresholds, such as the Apprentice Upper Secondary Threshold and the Upper Secondary Threshold for employees under 21, are not affected.
Why the government made the change
The policy paper states that the reduction in the threshold and the rate increase are intended to help fix the public finances and invest in public services, raising revenue for the NHS and contributory benefits such as the State Pension. The larger Employment Allowance is meant to protect the smallest businesses, and removing the GBP 100,000 cap turns it into a structural feature of the system available to all eligible businesses and charities.
What it means for employers
The combined effect of a higher rate and a lower threshold increases the cost of employing most staff, with the largest proportionate impact on part-time and lower-paid roles, where more of the salary now falls above the threshold. Smaller employers may see that offset, wholly or partly, by the larger allowance. Employers should check that payroll software has applied the 2025 to 2026 rates and thresholds, confirm that any Employment Allowance claim has been made, and review the cost of salary sacrifice arrangements and benefit packages, as these interact with employer NICs.
Sources
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