Starting April 6, 2025, UK businesses will experience increased National Insurance (NI) costs due to upcoming tax changes. The employer NI rate will rise from 13.8% to 15%, while the secondary threshold—the income level above which NI contributions are required—will drop from £9,100 to £5,000 annually (£417 monthly). As a result, businesses will see higher payroll expenses for employees earning over £5,000 per year.
Understanding National Insurance Contributions for Employers in 2025/26For UK employers, staying informed about NI rates and thresholds is essential to managing payroll effectively. Here are the key changes taking effect in the 2025/26 tax year:
Employer NI Rate: Increasing to 15% for earnings above £5,000 annually.
Employee NI Rate: Varies by category but typically remains at 12% for most employees.
Secondary Threshold: Reduced to £5,000 annually (£417 monthly).
Example Calculation: For a Category A employee earning £30,000 per year, the employer will pay approximately £3,749 in NI, marking a significant rise from previous years.
National Insurance Categories ExplainedEmployers must ensure they assign the correct NI category to their employees, as it determines the contributions deducted. NI categories vary based on factors such as age, marital status, employment history, and job type. Below is an overview of the primary categories:
NI CategoryEmployee GroupADefault category for most employeesBMarried or widowed women eligible for reduced NI contributionsCEmployees over State Pension ageHApprentices under 25JEmployees paying NI through another jobMEmployees under 21VArmy veterans in their first civilian jobZEmployees under 21 with another job contributing to NIFor the majority of employees, Category A is used unless they meet specific criteria for another classification.
Preparing for the 2025/26 ChangesAs businesses adapt to the new NI structure, utilizing tools like the National Insurance Calculator can simplify payroll calculations and help employers remain compliant with the updated regulations.