Employer’s National Insurance: latest rates and thresholds

When you employ people, you must pay National Insurance for each employee. This is on top of the National Insurance Contributions (NIC) taken from their wages.

The government has announced several changes to employers’ national insurance as part of the 2024 autumn budget. These changes are due to come into force from April 2025.

Read on for more information about the National Insurance increase for employers, as well as the current bands and how to calculate benefits.

What is Employer’s National Insurance?

Businesses are required by law to pay national insurance contributions for each of their employees.

It’s important to note that employer NICs represent a separate cost to the business based on the employee’s salary. Employees also pay NIC, which is deducted from their salary.

All National Insurance contributions go towards important services such as the National Health Service and the State Pension.

Employers make a secondary Class 1 National Insurance contribution to their employees, which is paid as a percentage of their earnings above a certain threshold.

If you’re looking for information on how self-employed people pay National Insurance, read our dedicated guide.

What are the National Insurance bands for employers?

NICs paid by employers are known as secondary contributions.

For the 2024-25 tax year they are paid at a rate of 13.8% above the secondary threshold of £9,100 per year (equivalent to £758 per month or £175 per week).

Employers do not pay any national insurance if their employees earn below the average threshold.

Tariffs for employee network cards

You will also pay Class 1 National Insurance contributions on behalf of your employees.

You deduct National Insurance from their wages during:

basic threshold: £1,048 per month or £242 per week.
Earning cap: £4,189 per month or £967 per week.

In the 2024-25 tax year, the basic employee national insurance rate will be eight per cent. The earnings cap is two percent.

National Insurance changes in 2024 – what do employers need to know?

As part of her Autumn 2024 Budget, Chancellor Rachel Reeves announced an increase in National Insurance and lowered the threshold at which employers start paying it.

The changes are designed to inject £25 billion into public finances and allow the government to stick to its manifesto pledge of not increasing income tax, national insurance or VAT for working people.

New national insurance rates

From April 2025, the rate paid by employers will increase from 13.8% to 15%.

The secondary education threshold will also be reduced from £9,100 per year to £5,000 per year (equivalent to £417 per month or £96 per week).

This means the amount you pay in National Insurance per employee will increase.

	2024-25	2025-26
National insurance rate	13.8%	15%
Annual threshold	£9100	£5000
Monthly threshold	£758	£417
Weekly threshold	£175	£96

How can employers reduce the impact of higher NICs?

To reduce the amount you pay into NIC as an employer, you can apply for Employment Allowance.

It is currently set at £5,000 for the 2024-25 tax year, but will increase to £10,000 for the 2025-26 tax year.

Businesses can claim unemployment benefit if their Class 1 National Insurance liability in the previous tax year was less than £100,000.

Employment Allowance reduces the amount you pay in NIC each time you make a payroll until you use up the full allowance or the end of the tax year.

It is important to note that you need to apply for Employment Allowance as it does not apply automatically.

How to calculate National Insurance as an employer

To determine how much National Insurance you need to pay for each employee, you will need to calculate how much they earn above the average threshold and multiply this by your NIC rate.

Here’s an example of an employee whose annual salary is £45,000 for the 2024-25 tax year:

Their weekly salary will be £865, £690 above the £175 threshold.

£690 x 13.8% = £95.22

This means you’ll pay a weekly amount of £95.22 in employer contributions (equivalent to £412 per month and £4,951 per year).

In the 2025-26 tax year, the amount you’ll have to pay will increase by 15 per cent above the £96 weekly threshold.

This means you’ll pay 15 per cent of £769, which works out to £115.35 per week, £1,384 per month or £5,998 per year.

When do you pay National Insurance as an employer?

Employers are required to deduct employees’ NIC from their salary. This will be done weekly or monthly, depending on how you pay your employees.

In addition, you will need to regularly report and pay your employer’s NIC to HMRC, with payments being made on time.

Late payment of NIC or incorrect reporting may result in a fine from HMRC.

It is important for businesses to budget for employer NICs as they can impact cash flow. This will be especially important when the rate increases and the threshold is lowered in April 2025.

Do you have unanswered questions about Employer National Insurance? Let us know in the comments below.

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