The NI increase 2025 is a significant policy change confirmed in the Autumn 2024 Budget. With a £22bn deficit to address, the government is increasing National Insurance rates for employers. Businesses must now act to understand the financial implications and prepare for the upcoming rise in payroll costs.
To help you navigate the NI increase 2025, we spoke with Coopers&Co’s Queen of Payroll, Natalie Standen, who breaks down what employers need to know.
NI Increase 2025: Key Takeaways for Employers
When Will the NI Increase Happen?
The new rules will take effect on 6th April 2025. Employers should start forecasting now to absorb the additional cost in their payroll systems.
How Much Extra Will Employers Pay?
Employer contributions will rise based on employee salary levels. Here are some projected figures:
- £27,000 salary: +£69.10/month or £829/year
- £60,000 salary: +£102.10/month or £1,225.20/year
Threshold Reduction for Employer National Insurance
The NI threshold will fall from £9,100 to £5,000 as of April 2025. This will expose more of each salary to Employer National Insurance (ERNI).
That’s an extra £615 per employee, annually, that businesses need to account for under the NI increase 2025.
Employment Allowance Uplift
The Employment Allowance is increasing from £5,000 to £10,500. While helpful, this change mainly benefits small employers with five or fewer staff.
Practical Examples
- Business with £135K wage bill (5 x £27K): ERNI saving = £1,354/year
- Business with £300K wage bill (5 x £60K): ERNI cost increase = £626/year
Rules for Linked Companies
Groups or connected companies must note:
- Only one company can claim the Employment Allowance.
- Sole traders and single entities are unaffected by this restriction.
Meet Natalie Standen, the Queen of Payroll
Natalie Standen, Coopers&Co’s ‘Queen of Payroll’, ensures our clients’ payroll is processed accurately and on time. She manages hundreds of payrolls each month, covering pensions, holiday pay, maternity pay, and SSP.
For businesses affected by the National Insurance increase, Natalie provides tailored advice to help you stay compliant and reduce risk. With over 35 years of payroll experience across a wide variety of sectors, she’s your go-to contact for all payroll-related questions.
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Whether you’re dealing with payroll, tax changes, or wider financial strategy, our expert team is here to support your business with advice tailored to your needs.
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