Employers’ NIC increase from April 2025

💼 2024 Autumn Budget: What the NIC Changes Mean for Employers

The 2024 Autumn Budget delivered some tough news for UK employers. With the government looking to raise £40 billion, businesses are expected to contribute £25 billion through changes to National Insurance Contributions (NICs). If you're an employer, these updates could have a big impact on your payroll costs.

Here’s what you need to know—and how to prepare.

🚨 Key Changes from April 6, 2025

Starting in the new tax year, several updates to employer NICs come into effect:

✅ Employer NICs rate increases to 15%✅ Threshold drops – Employers will start paying NICs on salaries above £5,000 (down from £9,100)✅ Employment Allowance increases to £10,500✅ Class 1A & 1B NICs (for benefits-in-kind and PAYE settlement agreements) will also rise to 15%

🔒 Employee NICs remain unchanged for 2025/26.

⚖️ Who’s Hit the Hardest?

• Small employers may avoid extra costs—or even save—thanks to the increased employment allowance.

• Large employers will likely face significant NIC hikes.

• Personal service companies with a sole employee (who is also the director) are still excluded from the employment allowance.

  
  

📊 What Do the Numbers Look Like?

Here’s a snapshot of how employer NICs will increase at different salary levels (before applying the employment allowance):

Salary	2024/25 NICs	2025/26 NICs	Increase
£10,000	£124.20	£750.00	£625.80
£30,000	£2,884.20	£3,750.00	£865.80
£50,000	£5,644.20	£6,750.00	£1,105.80
£100,000	£12,544.20	£14,250.00	£1,705.80

🧠 Real Business Examples

👥 A Ltd – Small employer, big winThree employees earning £10k, £20k, and £50k.2025/26 NICs: £9,750 – fully covered by the £10,500 allowance.📉 They’ll pay nothing in NICs next year.

📉 B Ltd – Medium employer, slight savingsSix employees at £30k.2025/26 NICs after allowance: £12,000 vs. £12,305 in 2024/25.📈 A small win overall.

💸 C Ltd – Large employer, major increase120 employees (100 at £20k, 20 at £40k).2025/26 NICs: £319,500 (after allowance), up from £235,704.💥 An increase of £83,796.

👤 D Ltd – Personal service companyPays a £12,570 salary.NICs rise from £478.86 to £1,135.50.💡 Still tax-efficient, but more expensive.

💡 How to Reduce the Impact

Thinking ahead can help ease the financial blow. Here’s what you can do:

🔹 Hire strategically – Under-21s, apprentices under 25, and veterans have higher NIC thresholds

🔹 Split roles – Two part-time staff might be cheaper than one full-time hire

🔹 Offer tax-exempt benefits – Avoid Class 1A NICs by providing non-taxable perks

🔹 Review PSAs – Class 1B NIC increases could make some PAYE settlement agreements unaffordable