When you employ people, you have to pay National Insurance for each employee. This is on top of the National Insurance contributions (NICs) taken from their wages.

The government announced several changes to employer National Insurance as part of the Autumn Budget 2024. These changes are due to take effect from April 2025.

Read on for more information about a National Insurance increase for employers, plus the current bands and how to calculate payments.

What is employer National Insurance?
What are the National Insurance bands for employers?
National insurance changes 2024
How to calculate National Insurance
When do you pay National Insurance?

What is employer National Insurance?

It’s a legal requirement for businesses to pay National Insurance contributions for each of their employees.

It’s important to note that employer NICs are a separate cost to the business, based on an employee’s wages. Employees also pay NICs, which are deducted from their wages.

All National Insurance contributions go towards important services like the NHS and the state pension.

Employers make a secondary contribution to their employees’ Class 1 National Insurance – paid at a percentage of their earnings above a certain threshold.

If you’re looking for information on how the self-employed 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, these are paid at 13.8 per cent above the secondary threshold of £9,100 a year (which equates to £758 a month or £175 a week).

Employers don’t pay any National Insurance if their employees earn below the secondary threshold.

Rates for employee NICs

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

You deduct National Insurance from their pay on earnings between:

the primary threshold: £1,048 monthly or £242 weekly
the upper earnings limit: £4,189 monthly or £967 weekly

For the 2024-25 tax year, the main rate of employee National Insurance is eight per cent. The upper earnings limit is two per cent.

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

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

These changes are intended to raise £25 billion towards public finances and allow the government to stick to its manifesto pledge not to increase income tax, National Insurance, or VAT for working people.

New National Insurances rates

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

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

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

	2024-25	2025-26
National Insurance rate	13.8%	15%
Annual threshold	£9,100	£5,000
Monthly threshold	£758	£417
Weekly threshold	£175	£96

How can employers reduce the impact of higher NICs?

To reduce the amount you pay in NICs as an employer, you can claim the employment allowance.

It’s currently set at £5,000 for the 2024-25 tax year, but will be increased to £10,000 for the 2025-26 tax year.

Businesses can claim the employment allowance if their Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.

The employment allowance reduces the amount you pay in NICs every time you run payroll until you’ve used up the full allowance or the tax year ends.

It’s important to note that you have to apply for the employment allowance as it isn’t automatically applied.

How to calculate National Insurance as an employer

To work out how much National Insurance you need to pay for each employee, you’ll need to calculate how much they earn above the secondary threshold and multiply this by your NICs rate.

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

Their weekly wage would work out at £865, which is £690 above the £175 threshold.

£690 x 13.8 per cent = £95.22

This means you’d be paying a weekly sum of £95.22 in employer contributions (equal to £412 a month and £4,951 a year).

For the 2025-26 tax year, the amount you’d need to pay will increase to 15 per cent above a £96 weekly threshold.

This means you’d pay 15 per cent on £769 which works out at £115.35 a week, £1,384 a month, or £5,998 a year.

When do you pay National Insurance as an employer?

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

On top of this, you’ll need to report and pay your employer NICs to HMRC on a regular basis, with payments made in a timely manner.

Failure to pay NICs on time or incorrect reporting could result in a penalty from HMRC.

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

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

More guides for small businesses

Photograph: Jacob Lund/stock.adobe.com

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Employer National Insurance: rates and thresholds for small businesses