Employers’ National Insurance Contributions
It was widely expected that National Insurance Contributions (NICs) would be the main target of the Chancellor as a very large revenue generator for the government, with easy implementation. These announcements will raise a huge £23.77 billion from the first year of enactment.
From 6 April 2025, the employer rate of National Insurance (known as the secondary rate) will increase from 13.8% to 15%.
In addition to the increased rate of secondary NICs, the threshold at which employers start paying secondary NICs will be reduced from £9,100 to £5,000 starting from the same date. This means that for each employee earning over £9,100, the employer will pay an extra £615 plus 1.2% on the excess salary.
By way of example for an employee earning a salary of £40,000, this will increase the employer NICs payable for that employee by £986 in 2025/26 compared to 2024/25.
Employment Allowance
The Employment Allowance is being increased to £10,500 from £5,000 from 6 April 2025.
Employment Allowance is available to any business or charity (including community amateur sports clubs) whose employers’ Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.
National Living Wage
The National Living Wage is increased by 6.7% to £12.21 per hour from 1 April 2025.
The 18-20 year old rate will increase by 16.3% to £10 per hour from the same date.
