National Insurance Changes Coming in 2025: What Employers Need to Know
As we edge closer to the 2025–26 tax year, there’s a big shake-up on the horizon for employers — changes to National Insurance Contributions (NICs). These adjustments could mean higher costs for many UK businesses, and now’s the time to start preparing.
At PSF Accounting, we’ve been following these updates closely, so here’s a straightforward look at what’s changing, why it matters, and what you can do to stay ahead.
What’s Changing from April 2025
From 6 April 2025, three key updates will come into play:
| Change | Current | From April 2025 | What It Means |
|---|---|---|---|
| Employer NIC rate | 13.8% | 15% | The cost of employing staff goes up. |
| Secondary threshold | £9,100 | £5,000 | You’ll start paying NICs on lower salaries. |
| Employment Allowance | £5,000 | £10,500 | More relief available — and more businesses will qualify. |
That lower threshold is particularly important. Even if your business hasn’t paid employer NICs before, you may now find yourself liable from 2025 onwards.
Why It Matters
- Higher employment costs
A 1.2% increase might not sound huge, but when you multiply it across a team, it adds up fast — especially for businesses with several employees or those paying hourly rates. - Cash flow considerations
Because NIC kicks in at a lower level, some businesses will see a noticeable increase in monthly payroll costs. Planning ahead can prevent nasty surprises when payments are due. - Employment Allowance opportunities
On the bright side, the Employment Allowance is rising to £10,500 and will be available to more employers. It’s worth reviewing your eligibility — you might save more than you think. - Payroll system updates
Make sure your payroll software is ready for the changes. Outdated systems could miscalculate contributions and lead to compliance headaches.
What You Can Do Now
At PSF Accounting, we’re encouraging our clients to get proactive. Here are a few easy wins:
- Run cost projections – Knowing how much extra NIC you’ll pay next year helps you plan your staffing and budget with confidence.
- Review your payroll setup – Ensure it’s ready for the new thresholds and rates.
- Check your eligibility for the Employment Allowance – You could be entitled to more relief than before.
- Revisit salary structures – For directors or owner-managed businesses, now’s a good time to review how salary and dividends are balanced.
- Plan for cash flow – Build the expected increase into your 2025 forecasts.
Putting It in Context
It’s also worth remembering that many UK tax thresholds remain frozen, even as wages and prices rise. This means more of your income — and your employees’ — will gradually move into higher tax or NIC bands. In other words, you may be paying more tax without earning more in real terms.
That’s why keeping on top of tax planning has never been more important. A bit of preparation now can make a big difference later.
How PSF Accounting Can Help
We know these changes can feel overwhelming, especially when you’re juggling payroll, compliance, and everything else that comes with running a business.
Our team can help you:
- Model how the NIC increase will affect your business
- Review and optimise your payroll setup
- Claim the correct Employment Allowance
- Plan ahead for cash flow and staffing decisions
If you’d like to chat through what the 2025 changes mean for your business, get in touch — we’re here to make sure you’re ready well before April rolls around.