Employers’ NIC increase April 2025

Tax rises were announced in Chancellor Rachel Reeves’ autumn budget – and an increase in employers National Insurance (NI) contributions was one of them.

The rise in employers NI is broken down in two ways

1. The rate of employers NI will increase 1.2 percentage points. This means businesses will now pay a rate of 15% instead of the current 13.8%. This equates to an 8.7% increase in the rate of employers NI.
2. The threshold at which businesses are required to pay NI on workers earnings has dropped from £9,100 to £5,000. For each employee who earns over £9,100 per year, this will equate to £615 extra NI purely due to the threshold reduction. (£9,100 - £5,000)) x 15% = £615)

When combined with the increase in minimum wage, which will push employees’ wages up anyway, the National Insurance increases can end up quite substantial.

To offset some of this increase, the Employment Allowance which businesses can claim against the employers NI liability will increase from £5,000 to £10,500. This will reduce any increase in liability by £5,500.

It is important to factor in these additional costs when considering price increases and pay rises in April.

Internet Link: HMRC