Increase in NI Employer Rates and Thresholds
Currently, employers pay secondary class 1 NIC at the rate of 13.8% on the amount by which an employee’s earnings exceed the secondary threshold (ST) of £9,100 per year/£175 per week.
At the Budget, it was announced that the rate will be increased to 15%, and that the ST will be reduced to £96 per week, announced by the Chancellor as £5,000 per year.
Increase in NI Employer Allowance
Currently, employers NI allowance is £5,000 for each tax year. At the budget, it was announced that to help protect smaller employers from the increase in NIC, the amount of the employment allowance will be increased from £5,000 to £10,500 per year from 6 April 2025.
Removal of £100,000 threshold
Currently, employer whose total NI employer due for previous tax year was above £100,000 threshold would lose their NI employer allowance. At the budget, it was announced that this threshold would be removed, and all employers can claim the NI allowance from 6 April 2025.
Mandating of payrolling of benefits-in-kind
Currently, employers have the option to process an end of year benefit in kind submission to HMRC, known as the P11D submission, whereby the employer declares all extra benefits granted to employees in the tax year and paying HMRC the NI employer due on these benefits.
At the budget, it was announced that reporting of benefits in kind via payroll software will become mandatory as of April 2026, except for employment related loans and accommodation as these can be difficult to value within the tax year.
Increase of National Living Wage (NLW) and National Minimum Wage (NMW)
From 6 April 2025
- Pre-Budget, the Chancellor announced increases in the National Living Wage (NLW) and the National Minimum Wage (NMW)
- NLW increases to £12.21 an hour from £11.44 (an increase of 6.7%).
- 18-20-year-old NMW rises to £10.00 an hour from £8.60 (an increase of 16.3%).
- 16-17-year-old NMW rises by £1.15 to £7.55.
- Apprentice rate NMW also rises by £1.15 to £7.55.
