Source HMRC
Employer National Insurance contributions and Employment Allowance changes announced at Autumn Budget 2024
At Autumn Budget 2024, the government announced changes to employer National Insurance contributions (NICs). The changes that will take effect from 6 April 2025 are:
- a reduction in the NICs secondary threshold
- an increase to the rate of secondary Class 1 NICs
- an increase in the Employment Allowance
- the removal of the Employment Allowance £100,000 eligibility threshold
The secondary threshold is the point at which employers start to pay NICs on an employee’s earnings. The secondary threshold will reduce from £9,100 a year to £5,000 a year from 6 April 2025 until 5 April 2028, and then increase by Consumer Price Inflation thereafter.
This does not affect the various employer upper secondary thresholds that exist for different employer NICs reliefs.
The employer NICs rate will increase by 1.2 percentage points from 13.8% to 15%. This rate will also apply to Class 1A and Class 1B which are expenses and benefits that employers give to their employees.
At the same time, the government is:
- increasing the Employment Allowance from £5,000 to £10,500
- removing the £100,000 threshold to expand to employers of all sizes
This means all eligible businesses and charities will be able to claim a greater reduction on their secondary Class 1 NICs liability regardless of what their NICs liabilities were in the previous tax year.
Most employers will not need to take additional action as a result of the NICs changes as they will be reflected automatically in updates to payroll software. We are working with software developers on the budget changes.
Some micro and small businesses will see no change in NICs liability.
Further information can be found at Autumn Budget 2024 — Overview of tax legislation and rates (OOTLAR).
Tax-related documents, which include tax information and impact notes, can be found at Autumn Budget 2024 tax related documents.
You can also read more about paying NICs at Running payroll — deductions.
Further information on Employment Allowance is available and will be updated to show the budget changes on 6 April 2025.