As announced in the budget back in November 2024, changes in the amount of National Insurance Employers need to pay will come in from April 6th 2025.
The rate of Employer’s National Insurance will increase from its current rate of 13.8% to to 15%.
The threshold at which Employers pay their National Insurance (known as the Secondary Threshold) on an Employee’s pay will decrease so that more of the wages will be subject to Employer’s NI.
From April, Employers will pay their NI on an Employee’s pay over £417 per month / £96 per week / £193 per fortnight / £385 per 4 weeks (£5,000 in total per year).
This is a significant reduction to the current thresholds.
Currently, for monthly paid staff the threshold is £758. As an example, at the moment, the Employer NI cost for a member of staff earning £1,875 per month is £154.15. From April, this will rise to £218.70 per month.
To help with the additional costs, the Employment Allowance will continue and will also be more than doubled to £10,500 per year from its current rate of £5,000.
The current eligibility cap (for Employers whose Employer National Insurance payments were over £100,000 in the last tax year) is being abolished so that more Employers will be eligible for the Employment Allowance from April 2025.
Sadly, there are no plans to extend the Employment Allowance eligibility to cover employers of domestic staff such as Nannies or Housekeepers.
Something else that is important to remember is that the reduction in the Employer NI threshold means that more Employers will need to register as such with HMRC if they are paying their employees £5,000+ per year (£417+ per month / £96+ per week / £193+ per fortnight / £385+ per 4 weeks). Many domestic staff will fall in to this category.
(Registration as an Employer still applies where the employee has other taxable income such as other employment or receives pension payments.)
Please do get in touch if you have any questions.