Members will be aware that from 1 April 2025 the changes to employers National Insurance Contributions will be implemented.  Measures include:

  • Secondary Threshold, currently set at £9,100 a year, and will be reduced to £5,000 a year
  • Increases to the secondary Class 1 NICs rate from 13.8% to 15%
  • Increases to the maximum Employment Allowance from £5,000 to £10,500
  • The restriction that currently applies to the Employment Allowance where employers who have incurred a secondary Class 1 NICs liability of more than £100,000 in the tax year immediately prior to the year of the claim are unable to claim it — this means all eligible businesses and charities will be able to claim a greater reduction on their secondary Class 1 NICs liability, irrespective of what their secondary Class 1 NICs liabilities were in the tax year prior to the year of the claim.

There is a useful calculator here to help work out the increase: https://zelt.app/blog/how-to-calculate-employers-ni-employer-s-ni-calculator-2024-2025-2026/

Salary Sacrific
A Salary Sacrifice scheme can help reduce NI costs for both employers and employers. If you are not already offering Salary Sacrifice, it is something worth considering – only 41% of small and medium enterprises offer salary sacrifice, compared with 85% of large organisations.

A salary sacrifice arrangement, which is Government backed, is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit.  An employee agrees with their employer to give up part of their salary in exchange for non-cash benefits, the most common of these being pension contributions.

This means that the employee’s gross salary is reduced by the amount they sacrifice. The result is lower National Insurance contributions for both the employee and employer.  For example: £5,000 paid through salary sacrifice into a pension would save an employer c.£750 at the April 2025 NI rate and the employee would not paying tax or NI on the amount sacrificed.

As an employer, you can set up a salary sacrifice arrangement by changing the terms of your employee’s employment contract. Your employee needs to agree to this change.  If your employee wants to opt in or out of a salary sacrifice arrangement, you must alter their contract with each change.  This can be done by way of a Variation to Contract letter.   Your employee’s contract must be clear on what their cash and non-cash entitlements are at any given time.

You can find out more information on the government website.