UK Employer National Insurance April 2025: What Every Business Owner Needs to Know

What Changed in April 2025 Employer National Insurance contributions increased from 13.8% to 15% from 6 April 2025 — a 1.2 percentage point increase. Simultaneously, the Secondary Threshold (the earnings level above which employer NI is charged) dropped from £9,100 per year to £5,000. Together, these changes significantly increase the cost of employment.

Who Is Affected All UK employers with at least one employee earning above £5,000 per year are affected. The double impact — higher rate AND lower threshold — means businesses with lower-paid workers are proportionally more affected than those with high earners.

Example calculation: An employee earning £28,000 per year. - Previous employer NI: (£28,000 - £9,100) × 13.8% = £2,608/year - New employer NI: (£28,000 - £5,000) × 15% = £3,450/year - Increase: £842 per employee per year

The Employment Allowance Increase Employment Allowance increased from £5,000 to £10,500 from April 2025. This means eligible employers (most businesses with employer NI bill above £0, excluding single-director companies without other employees) can offset £10,500 of their employer NI bill — equivalent to hiring approximately 1 additional employee at NLW before paying any employer NI.

5 Ways to Mitigate the Increase 1. **Review Employment Allowance eligibility** — confirm you're claiming if you have 2+ employees 2. **Consider salary sacrifice schemes** — pension salary sacrifice reduces employer NI as contributions come from gross pay before NI is calculated 3. **Review pay structure** — for directors: the optimal salary changed with the threshold drop; recalculate salary vs dividend split for 2025/26 4. **Check apprenticeship levy costs** — if payroll over £3M, the levy calculation is unchanged but overall employment costs rose 5. **Model vs contractor use** — for new hires, model the total cost of employment (salary + 15% NI + pension + holiday) vs contractor day rates to determine best structure

Impact on Different Business Types A retail business with 5 minimum wage employees (£12.21/hr, 40hrs/week, 52 weeks) pays approximately £3,200 more per year in employer NI from April 2025. A professional services firm with 10 employees averaging £45,000 pays approximately £8,400 more per year.