Increase in Employers National Insurance

November 8, 2024

National Insurance (NI) Rates Stay the Same for Workers

Labour’s Rachel Reeves has confirmed that the party is sticking to its promise to leave National Insurance, Income Tax, and VAT rates as they are for working individuals. So, if you’re employed, no changes are coming to your NI rates.

Employer’s National Insurance is Going Up

For employers, though, it’s a different story. From April 2025, the National Insurance contributions employers make will rise by 1.2 percentage points, bringing the rate to 15%. Plus, the threshold for when employers start paying NI will drop from £9,100 to £5,000, meaning businesses will pay NI on more of their employees’ earnings.

What These NI Changes Mean for Small Businesses

This increase adds extra pressure for small businesses, which are already dealing with rising costs in other areas like the National Minimum Wage. On the bright side, this makes salary sacrifice schemes (such as pension contributions) even more attractive as a way to save.

To help offset some of these changes, the Employment Allowance (EA) is going up from £5,000 to £10,500, and the cap is being removed. This means more businesses will be able to claim the EA, even those with an NI liability over £100,000 in the previous tax year, as long as they meet the other criteria.

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