A big talking point from the recent Autumn Budget was the announcement that employer’s National Insurance will rise from 13.8% to 15% from April 2025.
It was also announced that the earnings threshold when employers begin to pay National Insurance for their employees would be reduced from £9,100 to £5,000.
These two changes will lead to increases in National Insurance for most employers and it is therefore key for employers to be aware of the impact of these changes.
Please see below a summary showing the increase in employer’s National Insurance at different salary levels, these amounts are for a single employee only:
If we generalise, employer’s National Insurance will increase for most employers, but steps can be taken to lessen the impact.
It was also announced in the Budget that the employment allowance will increase from £5,000 to £10,500 from April 2025, therefore saving an additional £5,500 of employer’s National Insurance for eligible employers.
This means that the first £10,500 of employer’s National Insurance in the 2025/26 tax year will not need to be paid to HM Revenue and Customs. For the smaller businesses with few employees, or employees on low salaries this allowance may completely cover the additional national insurance costs.
Employers should review to ensure that they have claimed this allowance, through their payroll submissions, HM Revenue & Customs does allow employers to backdate claims for the previous four years, if the claim has been missed.
From April 2025, larger businesses will also be able to claim the employment allowance. There are certain exclusions:
- if you are a public body,
- if your business provides more than 50% of its services to the public sector
- If your company has only a sole director on the payroll
Consider offering salary sacrifice schemes, such as pension contributions or electric cars, for example. Under these schemes, employees sacrifice part of their salaries in return for pension contributions or benefits in kind. The amount of salary sacrificed is not subject to income tax and National Insurance.
A small consolation, but it is worth remembering that employer’s National Insurance is an allowable expense for your business. Therefore, tax relief will be available.
If you would like to discuss the above in more detail, and importantly more specifically for your business then please do not hesitate to get in touch, via email Stephen.tucker@djh.co.uk or by telephoning 0113 2525911.
Stephen Tucker – DJH Leeds
