Employer National Insurance contributions increased in April 2025. Many businesses are now reassessing their payroll strategy to stay efficient. Here’s how you can take control of your payroll costs for the rest of the year.
What Changed in 2025?
From 6 April 2025, UK businesses saw two key National Insurance changes:
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Employer NI rate increased from 13.8% to 15%
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Employer NI threshold lowered from £9,100 to £5,000 per employee
These changes mean employers now pay more National Insurance for lower-paid staff—and for more of the salary bill overall.
But it’s not all bad news:
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The Employment Allowance has been increased from £5,000 to £10,500, giving eligible businesses the chance to reduce their annual NI bill.
What Should Employers Be Doing Now?
With these changes already in place, now is the ideal time to review your payroll strategy. Here are 5 key actions:
1. Recalculate Your Payroll Forecast for 2025–26
If your staffing costs have risen unexpectedly, the new NI rules may be the cause. A mid-year payroll forecast helps:
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Identify your increased liabilities
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Model different staffing or salary scenarios
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Prepare for Q3 and Q4 budgeting
2. Make Sure You’re Claiming the £10,500 Employment Allowance
This increased allowance is designed to offset higher NI costs—but only if you actively claim it via your payroll software or HMRC.
If you employ staff and your total Class 1 NICs are below £100,000, you’re likely eligible.
3. Review Staff Roles and Working Patterns
The lower NI threshold means even part-time or low-wage employees may now trigger NI charges.
Consider:
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Consolidating roles where possible
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Offering flexible or seasonal contracts
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Adjusting pay structures to stay cost-effective
4. Check Director Salary vs Dividend Strategy
If you’re a company director, your salary-dividend mix may need adjusting to stay tax-efficient under the new NI regime.
It’s worth reviewing this annually—or mid-year if there have been big changes.
5. Ensure Your Payroll System is Fully Updated
Outdated payroll software or misconfigured systems could lead to incorrect NI deductions or missed allowances.
Make sure your provider has applied all 2025/26 thresholds and rates correctly.
Our Advice
Employer National Insurance is no longer a “tick-box” task. With higher rates and broader thresholds, it’s now a strategic decision that directly impacts your profit margins.
We’re helping businesses across the UK:
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Adjust payroll for the new rates
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Maximise Employment Allowance
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Optimise director remuneration
Need Support? Let’s Talk.
Our team can review your current payroll setup, calculate your new NI exposure, and help you claim what you’re entitled to.
Book a Payroll Review
Or contact us at: 0330 113 5111
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