What the April 2025 Employer NI Changes Mean for Your Business

The 2025-26 tax year brought the most significant employer National Insurance changes in recent memory. If you’re an employer, HR professional, or benefits consultant, understanding these changes is critical to managing your employment costs.

What changed in April 2025

Three major changes took effect on 6 April 2025:

1. Employer NI rate increased from 13.8% to 15%

The headline change. Every pound of employee earnings above the threshold now costs employers 1.2 percentage points more in NI contributions. For a business with 100 employees on average salaries, this adds up fast.

2. Secondary threshold dropped from £9,100 to £5,000

This is the threshold above which employers start paying NI on each employee’s earnings. Dropping it by £4,100 means employers now pay NI on a much larger portion of each employee’s salary. Combined with the rate increase, this is a double hit.

3. Employment Allowance doubled to £10,500

The good news: the Employment Allowance — the annual credit that small businesses can offset against their employer NI bill — doubled from £5,250 to £10,500. This was specifically designed to shield smaller businesses from the worst of the increases.

The real impact: worked example

Consider an employee earning £35,000:

	2024-25 (old)	2025-26 (new)
NI rate	13.8%	15%
Secondary threshold	£9,100	£5,000
Calculation	(£35,000 - £9,100) × 13.8%	(£35,000 - £5,000) × 15%
Employer NI cost	£3,574.20	£4,500.00
Increase		+£925.80 (+25.9%)

That’s an increase of £925.80 per employee — a 25.9% jump in employer NI costs for this salary level.

For a business with 50 employees at this salary, that’s an additional £46,290 per year before Employment Allowance.

How salary sacrifice can offset the increase

Salary sacrifice reduces the gross salary on which employer NI is calculated. Every £1 sacrificed into a qualifying benefit saves the employer 15p in NI (up from 13.8p last year).

Common salary sacrifice benefits include:

• Pension contributions — the most widely used scheme
• Cycle to Work — tax-efficient bikes and equipment
• Electric vehicle (EV) car schemes — rapidly growing in popularity
• Childcare vouchers — closed to new entrants since October 2018; legacy schemes only, and the employer NI saving does not apply under Optional Remuneration Arrangement (OpRA) rules
• Holiday trading — buying or selling additional leave days. Note: HMRC’s position on whether holiday trading constitutes salary sacrifice for NI purposes is nuanced and not fully settled. Take professional advice before relying on NI savings from this arrangement

The beauty of the rate increase is that it actually makes salary sacrifice more valuable to employers. The NI saving per pound sacrificed has increased from 13.8p to 15p.

What should employers do now?

1. Quantify your exposure — use our Employer NI Calculator to see exactly how much the changes cost your business
2. Review your benefits offering — if you don’t offer salary sacrifice pension or other schemes, now is the time to start
3. Model the savings — salary sacrifice schemes can fully offset the NI increase for many employers
4. Check Employment Allowance eligibility — ensure you’re claiming the full £10,500 if eligible
5. Communicate with employees — salary sacrifice benefits employees too, with income tax and employee NI savings

See your exact numbers

Our Employer NI Calculator lets you model the impact of these changes on your specific workforce. Enter your employee data to see before-and-after comparisons, salary band breakdowns, and multi-year projections.

Calculate your employer NI savings →

Frequently asked questions

How much did employer NI go up in April 2025?

The employer NI rate increased from 13.8% to 15% — a rise of 1.2 percentage points. At the same time, the secondary threshold (the point at which employers start paying NI on each employee’s earnings) dropped from £9,100 to £5,000, meaning NI is now payable on a much larger portion of each salary.

What is the employer NI rate for 2025-26?

The employer National Insurance rate for the 2025-26 tax year is 15%, applied to employee earnings above the secondary threshold of £5,000 per year.

How much more does employer NI cost per employee?

It depends on salary. For an employee earning £35,000, employer NI increased by £925.80 per year — a 25.9% jump. For a £50,000 salary, the increase is approximately £1,150 per year. Lower-paid workforces (retail, hospitality, care) are disproportionately affected because the threshold reduction creates a larger relative increase.

What is the Employment Allowance for 2025-26?

The Employment Allowance for 2025-26 is £10,500, doubled from £5,250 in 2024-25. This is an annual credit that eligible employers can offset against their total employer NI bill. It was specifically increased to shield smaller businesses from the worst of the April 2025 NI changes.

Can salary sacrifice offset the employer NI increase?

Yes. Salary sacrifice reduces the gross salary on which employer NI is calculated. Every £1 sacrificed saves the employer 15p in NI (up from 13.8p in 2024-25). For many employers, implementing or expanding salary sacrifice schemes — particularly pension, cycle to work, and EV car schemes — can fully offset the additional NI cost.