Get Ready for Employer National Insurance Changes from April 2025
Significant changes to employer National Insurance contributions (NICs) will come into effect on 6 April 2025. These changes will impact businesses of all sizes, with adjustments to contribution rates, thresholds, and the Employment Allowance (EA). Employers must understand these changes and prepare their payroll systems accordingly.
Key Changes to Employer National Insurance
1. Increased Employer NIC Contribution Rates
From 6 April 2025, the Secondary Class 1 NIC rate—the contribution employers pay on employees’ earnings above the threshold—will increase from 13.8% to 15%.
This increase will also apply to:
Class 1A NICs (on taxable benefits in kind)
Class 1B NICs (on PAYE Settlement Agreements)
2. Lower Secondary Threshold for Employer NIC Liability
The Secondary Threshold, which determines when employers must start paying NICs on an employee’s salary, will decrease from £9,100 to £5,000 per year.
What This Means for Employers:
If you employ staff earning £5,000 or more per year, you will now be required to pay employer NICs and report payroll information to HMRC.
If you haven’t previously been required to pay employer NICs, you may need to register with HMRC and use PAYE payroll software.
3. Changes to the Employment Allowance
The Employment Allowance (EA) reduces employer NIC liabilities for eligible businesses.
From 6 April 2025, the following changes will apply:
The EA will increase from £5,000 to £10,500 – meaning businesses can claim a larger NIC reduction.
The £100,000 NIC bill threshold will be removed – more businesses will now qualify.
Employers will no longer need to consider State aid restrictions that applied under the previous threshold rules.
Who Can Claim Employment Allowance?
Most small businesses and charities can claim EA, but there are restrictions:
Public bodies and businesses primarily performing public functions are not eligible.
If your company has only one director, and no other employees liable for NICs, you cannot claim EA.
How to Prepare for the Changes
To ensure compliance, employers should:
✔ Review payroll costs and budget for the increased NIC rates.
✔ Check whether you now need to pay employer NICs due to the lower threshold.
✔ Ensure payroll software is up to date and ready for the changes.
✔ If newly liable for employer NICs, register with HMRC and set up PAYE payroll reporting.
✔ Assess your eligibility for Employment Allowance and claim if applicable.
Need Help Navigating These Changes?
Understanding these National Insurance changes and their impact on your business can be complex. Your Payroll Team can help you:
Assess the financial impact on your business.
Ensure your payroll systems are updated and compliant.
Manage PAYE registration if you’re new to employer NICs.
Claim Employment Allowance if you’re eligible.
Get in touch today for expert payroll advice and support. Contact us here to speak to our team.
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