Employer NIC rising to 15% and Employment Allowance increasing to £10,500
From 6 April 2025, the rate of employer national insurance contributions (NICs) will rise by 1.2 percentage points to 15%.
Additionally, the threshold at which employers start to pay NICs will decrease from £9,100 to £5,000 per year. To support small businesses amid these changes, the government will increase the Employment Allowance from £5,000 to £10,500 and remove the previous £100,000 threshold, making it available to all eligible employers.
The Employment Allowance allows employers to offset their secondary (employer’s) class 1 NICs liabilities for the tax year, but it cannot be applied to class 1A or class 1B NICs. Employers can claim the Employment Allowance at any time during the tax year, which will then reduce the amount of secondary class 1 NICs owed to HMRC each payroll run, until the allowance is fully claimed or the tax year ends.
This allowance applies to the employer as a whole, not per employee, so it caps the reduction of secondary class 1 NICs liabilities to the annual allowance amount, regardless of the number of employees.
Employers can backdate their claim for the Employment Allowance for up to four previous tax years. In a group of connected companies, only one company can make the claim, and they can choose which one will do so.
For businesses in Northern Ireland, the Employment Allowance is considered a form of ‘de minimis state aid’ and counts towards the EU state aid threshold relevant to the employer's sector. It cannot be claimed if the sector's threshold has already been exceeded.
Certain employers and liabilities are excluded from the Employment Allowance: