Tag: National Insurance Contributions

Autumn Budget and National Insurance Changes

Employer National Insurance changes from April 2025

The Autumn Budget announced there is to be an increase in the rate of National Insurance Contributions (NIC) paid by employers in respect of the wages they pay to their employees.

Currently, employers pay employer NIC at the rate of 13.8% on wages over £9,100. From April 2025, the rate employers must pay NIC would increase by 1.2% from 13.8% to 15%.

In addition, the threshold where employer contributions become payable will6 fall from £9,100 to £5,000. The threshold will then remain at £5,000 until 5th April 2028. The plan is to increase the threshold annually for inflation.

To support businesses, the Government intends to make changes to the Employment Allowance. The Employment Allowance is available to eligible businesses to reduce their employer NIC each tax year. The allowance currently allows eligible businesses with employer NIC bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NIC bill.

The Chancellor announced an increase in the Employment Allowance from £5,000 to £10,500, and plans to remove the £100,000 eligibility threshold, expanding this to all eligible employers with employer NICs bills from 6th April 2025.

National Insurance Contributions Changes

For Employees

From 6 July 2022, as an employee you will be able to earn more before you start paying National Insurance. This means you may pay less tax, after accounting for the recent Health and Social Care Levy.

You can use this tool to get an estimate if you’re employed and paid the same amount monthly, by your employer through the PAYE system.

Click here to start

For Employers

The Primary threshold from 6 July 2022 to 5 April 2023 will be £242 per week and £1,048 per month, equivalent to £12,570 per year (increased from £9,880 per year).

PAYE tax and Class 1 National Insurance contributions

You normally operate PAYE as part of your payroll so HMRC can collect Income Tax and National Insurance from your employees.

Your payroll software will work out how much tax and National Insurance to deduct from your employees’ pay.

Tax thresholds, rates and codes

The amount of Income Tax you deduct from your employees depends on their tax code and how much of their taxable income is above their Personal Allowance.

England and Northern Ireland

PAYE tax rates and thresholds	2022 to 2023
Employee personal allowance	£242 per week £1,048 per month £12,570 per year

Changes to National Insurance Contributions

From April 2016, the Employment Allowance will rise from £2,000 to £3,000.

The Employment Allowance give businesses and charities a cut in the employer National Insurance they pay.

This means that, next year, businesses and charities will be able to employ 4 people full time on the National Living Wage and pay no National Insurance at all!