What national insurance contributions were announced in the autumn budget?
As widely predicted, the Chancellor announced increases to the rate of National Insurance contributions (NICs) paid by employers in the 2024 autumn budget. The primary rate of secondary Class 1 NICs will increase by 1.2% to 15% (from 13.8%) effective 6 April 2025. The Class 1A and Class 1B employer rates will also increase in line with this change.
The Class 1 NICs secondary threshold, at which employers start to pay NICs, will also be reduced to £5,000 (from £9,100) per year. This change will take effect from 6 April 2025 and last until 5 April 2028. Thereafter, the secondary Class 1 NICs threshold will be increased annually in line with the Consumer Price Index (CPI).
The Chancellor, Rachel Reeves, also announced that the Employment Allowance will increase from £5,000 to £10,500 to help small businesses with these changes. The existing allowance is only available to employers with employer NIC liabilities of under £100,000. The Chancellor confirmed that this threshold will be removed and that all eligible businesses will benefit from the increased allowance. Government figures have confirmed that this will result in 865,000 employers paying no NICs next year. These changes will come into effect from April 2025.
What do the new national insurance changes mean for small and growing businesses?
These changes in NIC liabilities for employers inevitably put further pressure on small businesses. Now, not only are there continuing cost increases in other areas of their business, but following the announcements from the autumn budget regarding the increase in the national minimum wage their employee costs will increase (even where the employee isn’t receiving a pay increase).
Unsure How the Changes to Employer National Insurance Contributions (NIC) Affect Your Business? Contact Us for Guidance!
The latest adjustments to National Insurance Contributions (NIC) for employers could have significant implications for your business’s bottom line. Understanding how these changes impact your payroll obligations is crucial to managing costs effectively and staying compliant.
At Moore South, we specialise in helping businesses navigate changes. Contact us today for personal advice on adjusting your financial strategy in light of the new National Insurance Contributions requirements. Let our experts guide you in maximising efficiency with your payroll
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