Employer National Insurance calculator
Changes to employer's National Insurance in April 2025
The following changes mean most employers will need to make larger National Insurance contributions.
From 6 April 2025, employer's National Insurance contributions will increase by 1.2 percentage points to 15%.
The secondary threshold – the point at which employers start paying National Insurance on a worker's salary – will be cut from £9,100 a year to £5,000.
However, the Employment Allowance will increase from £5,000 to £10,500.
Interactive employer's National Insurance calculator
Tax accountant and Enterprise Nation adviser Paula Tomlinson, founder of On the Spot Accountants, has designed this calculator to handle both calculations for employed staff and company directors' salaries.
How to use the employer's National Insurance calculator
This calculator lets you compare employer's National Insurance (NI) costs for 2024/25 versus 2025/26. Use it to work out the amount of NI contributions you'll pay as an employer.
Enter the unique employees' or company directors' annual gross salary amount, including other benefits like overtime or bonus.
Add the number of individuals in this salary bracket.
Add a new row for each salary amount.
See below certain categories to note alongside the calculator where different employer's NI thresholds apply:
1. Employer NI is 0% up to an annual salary of £50,270 for:
Employees under 21
Apprentices under 25
Veterans for one year
2. Employer NI is 0% up to an annual salary of £25,000 for:
Freeports
Investment Zones
3. The annual Employment Allowance isn't available for:
Single-director companies where that director is the only employee liable for employer NI
Businesses doing more than half their work in the public sector
Other companies that are in the same group or connected
For 2024/25 where the employer NI was over £100,000 (this restriction has been removed for 2025/26)
Can be restricted under state aid type rules
Note: The employer NI changes apply to sole traders and partnerships, where they have employees, not to the sole trader or partners themselves who are in a different NI system.
Detailed breakdown of 2025 National Insurance changes
1. Increase to the rate of employer's National Insurance contributions (NICs)
Employer NICs will rise from 13.8% to 15% on earnings above £5,000 per employee.
What does this mean?
Employers in the UK must pay 15% National Insurance (NI) on employees' earnings that exceed £5,000 per year, compared to 13.8% (2024/25) on earnings above £9,100.
Essentially, this results in a higher NI cost for businesses on most employees' salaries, particularly for those with higher pay.
2. Reduction of the secondary threshold
The secondary threshold will drop from £9,100 to £5,000 every year.
What does this mean?
The point at which employers start paying NI on an employee's earnings is now significantly lower at £5,000, compared to the previous year (when it was £9,100).
The change will apply to Class 1 NICs, which are paid on employee earnings above the secondary threshold, meaning employers will pay more NICs for each employee.
This change will be in effect until April 2028. After that, the threshold will increase in line with the Consumer Prices Index (CPI).
3. Enhancements to the Employment Allowance
Employment Allowance will increase from £5,000 to £10,500, with the removal of the £100,000 eligibility cap, allowing more businesses to benefit.
What does this mean?
The purpose of the Employment Allowance is to help eligible employers reduce their annual secondary Class 1 National Insurance liability.
In a move designed to protect the smallest employers from the National Insurance rise, the Employment Allowance will increase from £5,000 to £10,500. The Chancellor says this means 865,000 small businesses won't pay National Insurance.
The Autumn Budget also announced the removal of a significant restriction to the Employment Allowance, now scrapping the £100,000 threshold, so every employer can make use of the allowance.
Claiming Employment Allowance
What this means for employers (comparative analysis: 2024 versus 2025 NI structures)
As a result of these changes, employers will pay more National Insurance contributions in the tax year 2025/26 compared to 2024/25 (not counting the Employment Allowance) as illustrated in the table below for various salary levels.
Action steps for employers
Given these changes, it's understandable that many small businesses may want to rethink the structure of their workforce or pause on hiring new staff, which could ultimately affect their growth.
Apart from reviewing pay and bonuses, assessing employees' productivity or freezing hiring, you can take the following action to limit the financial impact of these changes:
Take advantage of the enhanced Employment Allowance: This is a no-brainer for eligible employers, especially since the removal of the £100,000 eligibility cap and the increased allowance amount in 2025/26.
Salary sacrifice schemes: Encouraging employees to trade part of their salary for non-cash benefits like pensions, childcare vouchers or cycle-to-work schemes will help reduce the NI bill for both you and your employees.
Invest in technology: Adopting tech solutions can boost productivity and make you less reliant on manual labour, especially for repetitive tasks. Although this will mean some upfront investment, it can lead to long-term savings.
Price increases: Many businesses may resist this option, but market conditions might make raising prices for products or services inevitable, as a way of absorbing the higher NI costs.
Plan and budget: Identify key skills gaps that are crucial to your business's growth and consider which roles can support these needs. This proactive approach will help you avoid "panic hiring" and let you stick to a well-thought-out plan that fits with your business objectives.
Make use of the gig economy: To tap into the gig economy effectively, start by clearly defining the specific skills and expertise you need for your projects. To attract the right talent, create detailed job listings that outline your expectations, the scope of the projects and what outcomes you're looking for. But remember to balance cost-saving measures with the potential impact on your existing employees' morale and on operational efficiency.
Explore apprenticeships and internships: Investing in apprenticeship and internship programmes can be a cost-effective way to bring fresh talent into your organisation. These programmes allow you to nurture young talent that can grow alongside your business. Consequently, you get new perspectives while keeping hiring costs manageable.
Embrace flexible work opportunities: Consider remote, temporary or part-time working arrangements to help control employment costs. Taking advantage of remote work doesn't only attract candidates seeking flexibility but also reduces overhead costs associated with office space. By offering remote positions, you can draw skilled professionals from across the country, making sure you find the right fit for your business without being constrained by geography.
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Example: Some possible scenarios
An analysis commissioned by Enterprise Nation looked at the impact of the NI rise on four different employment structures after the dust had settled on the Autumn Budget.
It compared four small business scenarios typical in the UK:
A busy high-street cafe with 26 full-time and part-time staff
An e-commerce business with 15 staff
A small recruitment firm with 10 higher-paid staff
A maker-retailer, such as a microbrewery with six staff members
Even within these four simple examples, the increases are wildly different.
Click the bottom right of the infographic to zoom in:
Why proactive financial planning is so important
Rising employment costs can put significant pressure on cash flow and profitability. As a result, you must budget accurately and make smart staffing decisions.
Without a solid plan, your business may struggle to keep salaries competitive, retain talent or even cover day-to-day expenses. But by getting ahead of these changes, you can stay in control, adapt with confidence and continue growing your business.
Here, accountancy expert and Enterprise Nation adviser Rebecca Barker, founder of Artful Accountancy, breaks down why planning for these cost increases is so vital, and how you can navigate them effectively.
Budgeting accurately for increased National Insurance costs
These changes mean businesses will face higher NI costs, even for lower-paid employees. Here's how to prepare:
Review payroll expenses: Understand how the increased rates and lower thresholds will affect your total payroll costs.
Adjust financial forecasts: Incorporate the updated NI contributions into your budgeting to stay ahead of future expenses.
Use payroll software or seek expert help: Accurate payroll calculations are vital. Working with an accountant or using the right software can help make sure you're keeping to the law and working efficiently.
Making informed decisions around staffing and salaries
As employment costs rise, making sound staffing and salary decisions becomes more important than ever. Here's how to manage these challenges:
Assess hiring plans: Consider whether full-time, part-time or contract roles are the best fit for your business's financial situation.
Review salary structures: Make sure wage increases, bonuses and other incentives line up with your budget and keep you sustainable in the long term.
Keep employees in the loop: Open communication about any planned changes will help maintain trust and morale among your team.
Evaluating the financial benefits of the Employment Allowance
The Employment Allowance can offer some relief by reducing your liability around employer's National Insurance. Here's how you can make the most of this benefit:
Check that you're eligible: Make sure your business meets the new criteria.
Factor it into your planning: Take advantage of the increased allowance when forecasting payroll expenses.
Get expert advice: Speaking to an accountant can help make sure you're taking advantage of all the available relief while staying in line with the law.
Finding ways to stay profitable as employment costs rise
Higher costs don't have to mean lower profitability. You can take proactive steps to remain financially strong:
Run more efficiently: Identify areas in which you can cut costs without sacrificing quality.
Adjust pricing if needed: Reviewing pricing strategies can help balance increased costs without making you less competitive.
Invest in automation and technology: Reducing manual workload can improve productivity and cut long-term expenses.
Keep a close eye on cash flow: Regular financial reviews will help you spot any potential issues early and stay in control.
Why planning matters
Ignoring these changes could put you under a lot more financial strain, as well as reducing your profit margins and leaving you with tough decisions down the line.
But with the right planning – whether it's updating budgets, reviewing hiring strategies or taking advantage of available allowances – you can stay ahead of the curve and continue growing with confidence.
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