Employers’ National Insurance Contributions

As has been widely publicised, significant changes to employers’ National Insurance in the UK will take effect from April. The Class 1 NICs rate will increase from 13.8% to 15%. Furthermore, the Secondary Threshold for Class 1 National Insurance contributions will be reduced from £9,100 to £5,000 per year. This means employers will start paying National Insurance on earnings above £5,000 instead of the previous £9,100 threshold.

The impact is partially mitigated by changes to the Employment Allowance, which will increase from £5,000 to £10,500. This allowance helps smaller businesses by reducing their National Insurance liabilities. Additionally, the restriction preventing employers with over £100,000 in secondary Class 1 NICs liabilities from claiming the Employment Allowance will be removed.

However, please note the following:

• if your business is part of a group then this is the total threshold for the group, and only one company in the group can make the Employment Allowance claim.
• You cannot claim if you are a company with only one employee paid above the Class 1 National Insurance secondary threshold, and that employee is also a director of the company.
• Also, there are some exceptions to eligibility, for instance payments made to off-payroll workers (for example, contractors), employees that are deemed to fall under IR35 or employees working in domestic settings, such as nannies, are excluded from the employment allowance calculation.

To ensure that we correctly apply for the Employment Allowance on your behalf this tax year, we do need your assistance.

Please click here to download a form to be completed and returned to us as soon as possible, upon receipt we will check and if you confirm you are eligible then we will claim the Employment Allowance through your PAYE as usual. If we do not receive your completed form, we will not submit your claim to HM Revenue & Customs.

There are options available to employers that could help mitigate the impact of this change, including expanding the use of salary sacrifice arrangements, which we explain in more detail in our article – https://www.cliveowen.com/2024/12/national-insurance-savings-what-can-an-employer-do/?

National Insurance Holiday for Employers of Veterans

This has now been extended for another year from 6 April 2025 to 5 April 2026.

Please let us know if you employ a veteran as the legislation gives national insurance relief in the first year of their civilian employment.

From 6 April 2024 this continues to be claimed through Real Time Information submissions. Any earnings of qualifying veterans hired from 6 April 2021 will be eligible for retrospective National Insurance contributions relief.