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Employers’ National Insurance increases for 2025: A guide
In April 2025, the Employers’ National Insurance contribution (NIC) rate rises by 1.2%. The UK’s second-largest tax, NICs are paid by both employees and employers. With the rate for employers rising, alongside a rise in the minimum wage, you may feel the pinch. However, with the right planning, it’s possible to protect your business from rising costs. Jump to a section:
What are the 2025 changes to National Insurance for employers?
The government has made a few changes to National Insurance for employers.
From 6th April 2025, the rate of Employers’ NICs will rise by 1.2%, from 13.8% to 15%, increasing staffing costs for many small businesses in the UK.
Employers will start paying NICs from £5,000 per year, rather than the current £9,100. This means businesses will pay NICs on more of their employees' income.
To support small businesses, the government is increasing the Employment Allowance from £5,000 to £10,500, helping eligible employers reduce their bill.
The £100,000 cap on Employment Allowance eligibility has been removed — meaning more small and medium-sized enterprises (SMEs) can now claim it.
In short, many employers will see higher NIC bills, but may benefit from increased relief.
Why have NICs risen, and what are they for?
The government sometimes raises NICs to raise money for public services like the NHS, pensions, and welfare — especially in the face of rising costs and economic pressures.
NICs help fund these services and count towards employees' entitlement to state benefits.
How will this impact businesses?
The increase in National Insurance for employers will affect your business, but it doesn’t have to be negative. Some businesses may even benefit from this year’s changes.
The removal of the £100,000 Employment Allowance cap and an increase from £5,000 to £10,500 may mean your business is more supported and your monthly bill is reduced.
However, many businesses will see a rise in costs due to the change in rate and threshold.
Your business may be particularly impacted if you have a lot of employees on minimum wage, as their NICs will rise considerably. Combined with the rise in minimum wage and changes in employee rights, you may need to make changes to protect your business.
11 ways businesses can adapt to these changes
2025 may bring higher costs for your business, but also opportunities for change. Here are some practical ways to adapt and stay resistant in the face of rising National Insurance.
Claim the Employment Allowance: this is now uncapped and open to more employers, and offers an extra £10,500 to help offset a larger monthly NIC bill.
Adapt your pricing model: where possible, adjust product pricing to reflect the rising costs for your business, while still retaining the trust of loyal customers.
Streamline your supply chain: Audit contracts with your suppliers, as you may be able to get a better deal elsewhere, or renegotiate a deal with a current supplier.
Talk to your employees: Ask your staff where they think costs can be cut, and focus on keeping and developing your best employees, rather than hiring.
Audit your business expenses: Look for savings in services or subscriptions you no longer need, or consider downsizing or going remote to save on rent or bills.
Look for funding and tax reliefs: As well as Employer Allowance, can you get any other tax reliefs from the government, such as for Research & Development?
Improve efficiency with technology: consider using AI tools, accounting and payroll software, or automation for some of your processes, to save money.
Review your staffing model: reducing hours, or outsourcing some non-core roles with self-employed people or software, can help cut costs and reduce your NICs.
Introduce salary sacrifice schemes: allow employees to trade part of their salary for pension contributions or other work benefits, to lower your employers’ NICs.
Explore other marketing channels: tap into new niche audiences by investing in digital marketing, or find new revenue streams with online products or media.
Team up with another business: consider merging or partnering with a like-minded small business to give you both more stability and resources.
By finding proactive ways to save money, you can help your business get through the rising NIC costs. With the right decisions, your business can flourish and grow in tough times.
How can businesses prepare for volatility in general?
Financial ups and downs are normal for any small business, so it helps to be prepared.
Using accounting software or finding an accountant can give you a clear view of your finances to make better decisions. By keeping an eye on your cash flow, and budgeting for rising costs, you can act fast when changes like the NIC rate increase happen.
It may also help to talk to a financial advisor. They can help you build a safety net, give unbiased advice for cutting costs, and plan for different scenarios for your business.
By being flexible and planning ahead, you can protect your business and your team.
How can QuickBooks help?
We hope we’ve given you some ideas for keeping your small business thriving in 2025. One of the first things you can do is get a better idea of your finances and automate tasks.
Here’s how accounting software like QuickBooks can help:
Payroll software to streamline paying and managing your employees
Invoicing tools to help track late payments and provide multiple ways to pay
Cash flow insights to understand your past, present, and future financial health
Expense tracking and automation, to save you admin time
Financial reports give an overview of your finances for funding or mergers
Disclaimer
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