Employer National Insurance Contributions (NICs) Changes from April 2025

The UK government has announced significant changes to Employer National Insurance Contributions (NICs), set to take effect from 6 April 2025. These changes will impact businesses of all sizes, with adjustments to NIC rates, thresholds, and allowances.

Key Changes to Employer NICs

1. Increase in Employer NICs Rate

• The Employer NICs rate will rise from 13.8% to 15%.
• This means businesses will face higher employment costs per employee.

2. Reduction in NICs Threshold

• The annual threshold for employer NICs (the point at which employers begin paying NICs) will decrease from £9,100 to £5,000.
• Employers will start paying NICs on more of an employee’s earnings, increasing payroll costs.

3. Increase in Employment Allowance (Support for Small Businesses)

• The Employment Allowance will rise from £5,000 to £10,500, helping businesses reduce their NICs liability.
• This is particularly beneficial for small businesses, as it offsets their NIC costs.

4. Removal of the £100,000 Threshold

• Previously, businesses with NIC liabilities exceeding £100,000 were ineligible for the Employment Allowance.
• This threshold is being removed, allowing more businesses to benefit from the increased £10,500 Employment Allowance.

Impact on Employers

✅ Small Businesses: Many will see a reduction in NICs liability due to the increased Employment Allowance. Approximately 865,000 employers are expected to be exempt from NICs entirely in the 2025/2026 tax year.

❌ Larger Employers: Those with higher payroll costs will face increased NICs due to the higher rate (15%) and lower threshold (£5,000). This could lead to higher employment costs and potential business adjustments.

What Employers Should Do

🔹 Review Payroll Costs: Businesses should reassess their employment expenses to understand the impact of these changes.

🔹 Utilize Employment Allowance: Smaller businesses should ensure they claim the increased £10,500 allowance to reduce their NICs liability.

🔹 Plan for Budget Adjustments: Employers should forecast increased payroll costs and plan accordingly.

The NICs changes from April 2025 will have varying effects depending on business size and payroll structure. While small businesses may benefit, larger employers should prepare for higher employment costs.

📌 Stay informed and consult with financial advisors or payroll specialists to ensure your business is ready for these changes.