The 2025/26 tax year will bring some important updates to Employer’s National Insurance (NI) in the UK, impacting how businesses calculate their payroll contributions. With an increased NI rate, a lower threshold, and a boosted Employer’s Allowance, some businesses may see higher costs, while others could benefit from the changes.
At FreshPay, we’re here to break down these updates so you can prepare and manage your payroll with confidence.
What Will Change?
📌 Higher Employer’s National Insurance Rate
From April 2025, the Employer’s NI rate will increase from 13.8% to 15% on earnings above the threshold. This means businesses with larger payrolls will likely see an increase in their NI contributions.
📌 Lower Threshold for NI Contributions
The threshold at which employers begin paying NI for their employees will drop from £9,100 to £5,000. This means that a larger portion of employees’ wages will be subject to NI, increasing payroll costs for many businesses.
📌 Employer’s National Insurance Allowance Increase
The Employer’s National Insurance Allowance – which reduces the total NI bill for eligible businesses – will increase from £5,000 to £10,500. For many small businesses, this increase could offset the additional costs from the higher rate and lower threshold.
Who Will Be Affected?
The impact of these changes will depend on the size and salary structure of your workforce:
- 📉 Businesses with Lower-Salary Employees: If you employ staff earning close to the new £5,000 threshold, you’ll now need to pay NI on a larger portion of their salary.
- 📈 Businesses with Higher-Salary Employees: If your workforce earns well above the threshold, you’ll see increased NI costs due to the higher contribution rate.
- 🏢 Small Businesses: While costs may rise, the increased NI Allowance could help reduce the impact for many small businesses.
- 🚀 Growing Businesses: If you’re planning to hire more staff, these changes should be factored into your payroll budgeting.
Example Scenarios
Let’s break down how these changes could impact businesses of different sizes:
📊 5 Employees Earning £25,000 Each
With the higher NI Allowance (£10,500), a business with five employees at this salary level could save approximately £1,471 compared to the previous tax year.
📊 7 Employees Earning £25,000 Each
For a business with seven employees at £25,000 each, the increase in Employer’s National Insurance Allowance offsets the additional costs from the lower threshold and higher rate—meaning their overall contributions will stay roughly the same.
How FreshPay Can Help
Understanding the impact of these changes can be tricky. That’s why we’re offering a free downloadable NI calculator to help you:
✅ Enter your employee salaries to see how the new rules affect your business.
✅ Calculate how much more (or less) you’ll pay under the 2025/26 rules.
✅ Compare your payroll costs before and after the changes.
Download the NI Calculator Here
Planning Ahead
With these changes coming soon, now is the time to get prepared:
📌 Review Your Payroll Budget – Adjust financial plans to accommodate potential increases.
📌 Look for Efficiency Gains – Consider automation and payroll software to streamline operations.
📌 Stay Compliant & Informed – FreshPay keeps you up to date with all payroll legislation, so you’re always on top of your obligations.
Stay Ahead with FreshPay
While changes to Employer’s National Insurance may bring challenges, they also present an opportunity to review your payroll strategy and optimise your processes.
At FreshPay, our cloud payroll software makes managing payroll fast, efficient, and stress-free. From automated employer’s national insurance calculations to simple compliance updates, we help businesses navigate payroll changes with ease.
Get ahead of the changes – book a FreshPay demo or download our NI calculator today!