Key Employer NIC Changes from April 2025: What You Need to Know

Starting 6 April 2025, businesses will need to adjust to a 1.2 percentage point rise in National Insurance contributions (NICs), coupled with a significantly lower threshold for secondary Class 1 NICs. At the same time, the government is introducing a higher Employment Allowance to help alleviate the pressure on smaller employers.

The standard rate of employer National Insurance (Class 1 secondary NICs) will increase from 13.8% to 15%. This revised rate will also extend to Class 1A and Class 1B employer contributions.

A notable change is the reduction in the secondary threshold—the earnings level at which employers begin paying NICs—for Class 1 contributions. This will fall from £9,100 to £5,000 annually, effective from 6 April 2025. The new threshold will remain fixed until 5 April 2028, after which it will be reviewed annually in line with the Consumer Price Index (CPI).

To cushion the impact for smaller businesses, the Employment Allowance will more than double, rising from £5,000 to £10,500. This allowance enables eligible employers to offset their NICs liability. Previously limited to those with under £100,000 in total NICs liability, the cap is being removed, making more employers eligible to benefit.

Government estimates suggest that around 865,000 employers will pay no National Insurance contributions at all in the 2025–26 tax year due to these adjustments.

Employers should note that it’s possible to claim less than the full Employment Allowance if it fully offsets their NICs bill.