Employer’s National Insurance is Changing – What It Means for Your Business in 2025/26

If you employ staff, the 2025/26 tax year will bring some important changes to Employer’s National Insurance (NI). Whether you're running a small team or just starting to grow, it's worth understanding how these updates might affect your payroll costs.

What’s Changing?

📈 1. Higher Employer’s NI Rate

From April 2025, the Employer’s NI rate is increasing from 13.8% to 15%. This applies to earnings above the NI threshold and means you’ll be paying a little more for each employee.

📉 2. Lower NI Threshold

The earnings threshold – where Employer NI starts applying – will drop from £9,100 to £5,000 per year. That means more of each employee’s pay will be subject to NI, even for lower-paid staff.

💸 3. Higher Employer’s NI Allowance

Good news for small businesses: the Employer’s Allowance (which reduces the total NI you pay) is increasing from £5,000 to £10,500. If your business is eligible, this could help offset some or all of the increased costs.

Who Will This Affect?

• Small businesses with lower-wage staff may feel the impact as more of their salaries will now be subject to NI.

  
  

• Businesses with higher-wage teams will see their contributions go up due to the higher rate.

  
  

• Employers planning to hire should factor these changes into their payroll budgets.

  
  

• Most small businesses who qualify for the new £10,500 allowance might still come out ahead – or at least break even.

Example: How It Could Look in Practice

👥 5 Employees Earning £25,000 Each

Your business could actually save around £1,471 next year thanks to the increased allowance, even though the NI rate is higher.

👥 7 Employees Earning £25,000 Each

The extra allowance offsets the additional costs, so your overall NI bill might stay about the same.

What You Can Do Now

Here are three simple steps to get ready:

✅ Check your payroll software – make sure it’s set up to apply the new rules.

✅ Review your payroll budget – factor in the changes to avoid surprises.

✅ Get advice – if you’re unsure how this will affect you, we’re happy to help.

How KHAccounts Can Help

We work with small businesses every day, and we know these updates can feel overwhelming. That’s why we offer:

✔️ Easy-to-understand guidance

✔️ Payroll setup and checks

✔️ Ongoing support with payroll and compliance

📩 Need help preparing for these changes?Get in touch with us at KHAccounts and let’s make sure your business is ready for the 2025/26 tax year – with no stress and no surprises.