Implementation of National Insurance Increases

What’s this all about?

The legislation implementing the changes to employer National Insurance Contributions (NICs) announced in last Autumn’s Budget, received Royal Assent on 3 April and came into force from 6 April 2025. The National Insurance Contributions (Secondary Class 1 Contributions) Act 2025 provides for a 1.2 percentage points increase in the rate of employer NICs (raising them from 13.8% to 15% of relevant earnings), and a lowering of the earnings threshold for liability (from £9,100 to £5,000 per annum).

What does this mean for UK employers?

As an employer, you may be able to reduce the cost impact of the NIC increases through reviewing your pension design. In particular:

• Employers who are not operating salary sacrifice should consider implementing salary sacrifice to reduce impact of NIC rises.
• Employers who are operating salary sacrifice should consider what action they can take to encourage greater employee participation, which can in turn lead to increased savings. Such employers could also review the sharing of the their NI savings from salary sacrifice and review any cash allowances paid in lieu of pension contributions.