Guide
Employer NI increase from April 2025
A practical guide to the employer National Insurance increase to 15 percent from April 2025, why it matters for employees, and how it changes the cost of employment.
What changed in April 2025
From April 2025, employer National Insurance contributions increased in two ways:
1. The rate increased from 13.8 percent to 15 percent 2. The secondary threshold (the point at which employer NI starts) was reduced from GBP 9,100 to GBP 5,000 per year
Together, these changes significantly increased the cost of employing someone. This was one of the largest employer payroll tax increases in recent UK history.
How much more does it cost to employ someone
Example at GBP 40,000 salary
Before April 2025: - Employer NI: 13.8 percent on earnings above GBP 9,100 - GBP 40,000 minus GBP 9,100 = GBP 30,900 at 13.8 percent = GBP 4,264
From April 2025: - Employer NI: 15 percent on earnings above GBP 5,000 - GBP 40,000 minus GBP 5,000 = GBP 35,000 at 15 percent = GBP 5,250
Increase: GBP 986 per year — a 23 percent increase in employer NI for this salary level.
Example at GBP 70,000 salary
Before April 2025: GBP 8,404 per year From April 2025: GBP 9,750 per year Increase: GBP 1,346 per year
The increase is larger at higher salaries in absolute terms, but proportionally the biggest impact is on lower-paid roles where the threshold reduction from GBP 9,100 to GBP 5,000 has the greatest effect.
Why this matters even though it is not deducted from your pay
Employer NI does not appear on your payslip. It does not reduce your take-home pay directly. But it matters for several practical reasons:
Pay rises and hiring budgets
When employer costs increase, employers have less budget available for salary increases. A company that planned to offer a 3 percent pay rise may offer 2 percent instead because the NI increase has already consumed part of their payroll budget.
Job offers and total compensation
When comparing offers, the employer's total cost is relevant because it affects what they can offer across salary, pension, and benefits. An employer spending an extra GBP 1,000 per employee on NI has GBP 1,000 less for other compensation.
Salary sacrifice becomes more attractive for employers
Salary sacrifice reduces the salary on which employer NI is calculated. At the new 15 percent rate, the employer NI saving from salary sacrifice is larger than before. This creates a stronger incentive for employers to offer salary sacrifice schemes and potentially to share the employer NI savings with employees through enhanced pension contributions.
Practical takeaway: if your employer offers salary sacrifice and shares the NI saving, the value of that arrangement increased in April 2025.
The employment allowance
Small businesses may be eligible for the Employment Allowance, which offsets up to GBP 10,500 of employer NI per year from April 2025 (increased from GBP 5,000). This means the smallest employers are partly or fully shielded from the increase, but medium and large employers bear the full cost.
How this affects different workers
Standard employees
No direct impact on your payslip, but indirect pressure on pay budgets, hiring, and the attractiveness of salary sacrifice.
Contractors considering permanent roles
The higher employer NI makes permanent employment more expensive relative to contractor arrangements. When comparing a day rate with a permanent salary, the employer's NI cost is part of the gap the employer is closing. See the day-rate to salary calculator for modelling this.
Part-time workers
The threshold reduction from GBP 9,100 to GBP 5,000 means employer NI now applies to more part-time workers whose earnings were previously below the threshold. This increases the cost of part-time employment disproportionately.
What the calculators show
PayPath's take-home calculators model employee deductions: your income tax, your NI, and your student loans. They do not show employer NI because it does not affect your take-home pay.
However, understanding employer NI helps you:
- interpret why pay rises may be smaller than expected
- appreciate why employers value salary sacrifice
- make better job offer comparisons when total employment cost is part of the conversation
Practical steps
1. Run the take-home pay calculator to see your employee deductions 2. If your employer offers salary sacrifice, use the salary sacrifice calculator to see whether the combined tax and NI savings make it worthwhile 3. If you are comparing a permanent role with a contract, use the job offer comparison calculator to see the employee-side numbers clearly
Official sources
Further reading for the primary rules
These are the most useful primary-source links behind this guide. Use them to verify the key rule or threshold, not to replace the guide with a wall of reference material.
Try the calculators
Run your own numbers through the calculators that connect to this content.
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How to use PayPath here
Run the relevant calculator for your live numbers, review the methodology if the assumptions matter to your decision, and save the strongest scenarios in the workspace if you are comparing more than one option.