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Employer National Insurance Increase in 2025-2026: What UK Businesses Need to Know https://cityheightsaccounting.co.uk/wp-content/uploads/2019/03/fav.png
From 6 April 2025, UK employers will face a significant shift in employment-related costs. The government’s new Employer National Insurance (NIC) rules, combined with an increase in the National Minimum Wage, will result in a higher cost of employing staff, especially for businesses with lower-paid or part-time workers.

At City Heights Accounting Services, we’re helping our clients stay proactive by reviewing payroll budgets, reassessing workforce structures, and identifying ways to reduce the overall impact on business performance.

What’s Changing in 2025/26?

Two key changes to Employer NICs will apply from the start of the 2025/26 tax year:

Employer NIC Rate Increase:

The standard Employer NIC rate will rise from 13.8% to 15%.

Lower Secondary Threshold for NICs:

Employers will begin paying NICs on employee earnings above £5,000 per year, down from the current £9,100.

This means employers will pay a higher rate on a larger portion of each employee’s salary, significantly increasing overall payroll costs.

You can find full details here: https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2025-to-2026

What Does This Mean for Employers?

For many businesses, the combined effect of a higher NIC rate and a lower threshold could mean:

Higher overall employment costs

Reduced margins on labour-intensive services

Pressure on hiring budgets and wage structures

Need for more detailed payroll forecasting and cash flow planning

The impact will be felt across all industries, but especially those employing part-time workers or paying near-minimum wage, where margins are tight and passing on increased costs to clients may be difficult.



Real Impact: What the Numbers Show

To illustrate the financial impact, let’s consider a common scenario: a business employing someone on minimum wage, working 20 hours per week.

In the 2025/26 tax year, the minimum wage will rise from £11.44 to £12.21 per hour. This alone increases gross monthly pay by over £66, or around £800 more per year for just one employee.

However, the more substantial rise comes from Employer NICs. Due to the combination of the increased NIC rate (15%) and the lower threshold (£5,000) at which contributions start, the monthly Employer NIC bill for this same employee jumps from just over £32 to more than £96, nearly tripling. Over the course of a year, that’s an additional £768 in NICs alone.

Add in a modest increase in pension contributions, and the total rise in employer cost reaches approximately £1,595 annually per employee working part-time hours on minimum wage.

Multiply that across a team, and the financial impact becomes clear, especially for businesses in hospitality, retail, care, or other labour-intensive sectors.



How Can I Prepare for the Employer National Insurance Increase?

Adapting to these changes doesn’t have to be overwhelming. With a strategic approach, employers can minimise disruption while maintaining workforce stability.

Here are practical steps to take now:

Review Payroll Budgets – Adjust your payroll forecasts to reflect both the increased NIC rate and the lower threshold. Factor in the new National Minimum Wage rate if it applies to your staff, and assess the cumulative impact across different teams.

Optimise Workforce Planning – Look at your staffing model. Are there opportunities to restructure roles or increase productivity per hour worked? Review your use of part-time and flexible contracts to ensure they remain cost-effective under the new rules.

Consider Salary Sacrifice Schemes – These arrangements allow employees to exchange part of their salary for non-cash benefits, like pensions or cycle-to-work schemes, helping reduce NIC liabilities for both employers and staff.

Talk to an Accountant Early – A proactive review can help you identify cost-saving opportunities and ensure full compliance. We’re here to guide you through those conversations.



How City Heights Accounting Services Can Help

At City Heights Accounting Services, we’re committed to easing the pressure these changes bring. Whether it’s forecasting how the new NIC rules will impact your payroll, helping you make the most of the increased employment allowance, or offering smart advice on staffing and budgeting, we’re here to provide clear, practical support. Our goal is to help you stay compliant, protect your margins, and make confident decisions for your business.

Get Support That Works for You

The Employer NIC changes are not just a minor adjustment; they represent a material shift in the cost of doing business in the UK. With tailored planning and expert advice from City Heights Accounting Services, you can stay ahead of rising costs and continue to grow sustainably.

Need support? Whether it’s a cost review or workforce strategy discussion, we’re here to help you protect your margins and plan with confidence. Get in touch today.

The post Employer National Insurance Increase in 2025-2026: What UK Businesses Need to Know appeared first on City Heights.

Employer National Insurance Increase in 2025-2026: What UK Businesses Need to Know - City Heights From 6 April 2025, UK employers will face a significant shift in employment-related costs. The government’s new Employer National Insurance (NIC) rules, combined with an increase in the National Minimum Wage, will result in a higher cost of employing staff, especially for businesses with lower-pai...

New Minimum Wage and Payroll Updates for Employers in 2025-26 https://cityheightsaccounting.co.uk/wp-content/uploads/2025/02/New-HMRC-Rates-2025-26-image-300x300.png

The new tax year is just around the corner, and with it comes changes that will impact your business expenses. Staying on top of these updates will help you manage costs effectively and ensure compliance. Here’s what you need to know to stay ahead.

National Minimum Wage Increases

Starting April 2025, the minimum wages for workers will rise. Here’s the breakdown:

Workers aged 23 and over: £12.21 per hour (up from £11.44) – a 7% increase.

Workers aged 18-20: £10.00 per hour (up from £8.60) – a 16% increase.

Workers under 18: £7.55 per hour (up from £6.40) – an 18% increase.

Apprentices (under 19 or in their first year): £7.55 per hour (up from £6.40) – an 18% increase.

These changes mean higher payroll costs, so make sure to review your wage structures and budget for these increases. Staying compliant with minimum wage rules is essential to avoid penalties.

Updates to Employee Payments

Some key payments for employees will also increase:

Maternity, Paternity, Shared Parental, and Bereavement Pay: £187.18 per week (up from £184.03).

Sick Pay (SSP): £118.75 per week (up from £116.75).

Neonatal Care Pay: A new benefit at £187.18 per week, offering financial support to parents caring for newborns in neonatal care.

Be sure to adjust your payroll system to reflect these new amounts.

National Insurance Contributions (NIC)

Employer NIC Rate: Rising from 13.8% to 15%. This means you’ll pay more for every employee earning above the NIC threshold. Plan your budget accordingly.

Recovering Employee Payments

Good news! If your business had NIC bills below £45,000 last year, you can now recover 108.5% of statutory payments (up from 103%). For businesses with higher NIC bills, you can recover 92% of these costs.

Employment Allowance Boost

The Employment Allowance, which reduces what you pay in NIC, is doubling from £5,000 to £10,500. This is a fantastic opportunity for small businesses to save money and reinvest in their operations.

What You Should Do Next

Review Wages: Update employee pay rates to meet the new minimum wage requirements.

Plan for Increases: Factor in higher payments like maternity and NIC when planning your budget.

Take Advantage of Allowances: Use the increased Employment Allowance to cut costs.

Stay Compliant: Make sure your payroll system is updated to avoid any penalties.



Here is the full guide from HMRC: Rates and thresholds for employers 2025 to 2026 – GOV.UK



Let City Heights Accounting Services Help You

We know how overwhelming these changes can feel, but you don’t have to face them alone. At City Heights Accounting Services, we specialise in helping businesses:

Stay compliant with government rules.

Budget effectively for payroll and expenses.

Streamline payroll systems to save time and money.

Get in touch with us today to ensure your business is ready for the new tax year and beyond.

The post New Minimum Wage and Payroll Updates for Employers in 2025-26 appeared first on City Heights.

New Minimum Wage and Payroll Updates for Employers in 2025-26 - City Heights The new tax year is just around the corner, and with it comes changes that will impact your business expenses. Staying on top of these updates will help you manage costs effectively and ensure compliance. Here’s what you need to know to stay ahead. National Minimum Wage Increases Starting April 20...

New Minimum Wage and Payroll Updates for Employers in 2025-26

The new tax year is just around the corner, and with it comes changes that will impact your business expenses. Staying on top of these updates will help you manage costs effectively and ensure you meet government rules.

Here's what you need to know to stay ahead.

National Minimum Wage Increases
Starting April 2025, the minimum wages for workers will rise. Here's the breakdown:
• Workers aged 23 and over: £12.21 per hour (up from £11.44) – a 7% increase.
• Workers aged 18-20: £10.00 per hour (up from £8.60) – a 16% increase.
• Workers under 18: £7.55 per hour (up from £6.40) – an 18% increase.
• Apprentices (under 19 or in their first year): £7.55 per hour (up from £6.40) – an 18% increase.

These changes mean higher payroll costs, so make sure to review your wage structures and budget for these increases. Staying compliant with minimum wage rules is essential to avoid penalties.

Updates to Employee Payments
Some key payments for employees will also increase:
• Maternity, Paternity, Shared Parental, and Bereavement Pay: £187.18 per week (up from £184.03).
• Sick Pay (SSP): £118.75 per week (up from £116.75).
• Neonatal Care Pay: A new benefit at £187.18 per week, offering financial support to parents caring for newborns in neonatal care.

Be sure to adjust your payroll system to reflect these new amounts.

National Insurance Contributions (NIC)
• Employer NIC Rate: Rising from 13.8% to 15%. This means you’ll pay more for every employee earning above the NIC threshold. Plan your budget accordingly.
Recovering Employee Payments

Good news! If your business had NIC bills below £45,000 last year, you can now recover 108.5% of statutory payments (up from 103%). For businesses with higher NIC bills, you can recover 92% of these costs.

Employment Allowance Boost
The Employment Allowance, which reduces what you pay in NIC, is doubling from £5,000 to £10,500. This is a fantastic opportunity for small businesses to save money and reinvest in their operations.

What You Should Do Next
1. Review Wages: Update employee pay rates to meet the new minimum wage requirements.
2. Plan for Increases: Factor in higher payments like maternity and NIC when planning your budget.
3. Take Advantage of Allowances: Use the increased Employment Allowance to cut costs.
4. Stay Compliant: Make sure your payroll system is updated to avoid any penalties.

Here is the full guide from HMRC: Rates and thresholds for employers 2025 to 2026 - GOV.UK

Let City Heights Accounting Services Help You
We know how overwhelming these changes can feel, but you don’t have to face them alone. At City Heights Accounting Services, we specialise in helping businesses:
• Stay compliant with government rules.
• Budget effectively for payroll and expenses.
• Streamline payroll systems to save time and money.

Get in touch with us today to ensure your business is ready for the new tax year and beyond.

Changes are coming! From National Insurance increases to business rate discounts, the Autumn Budget 2024 covers a lot. We’ve outlined the biggest updates impacting businesses – read more in our new article. https://cityheightsaccounting.co.uk/wp-content/uploads/2019/03/fav.png
Autumn Budget 2024 Insights: What’s New for Payroll, National Insurance, and Taxation?

The UK Autumn Budget 2024, presented by Chancellor Rachel Reeves under the Labour government, outlines significant changes across payroll, business, and taxation policies aimed at supporting economic growth, improving fairness in the tax system, and adjusting to current economic demands.

Below is a summary of the most relevant updates impacting employers, employees, and business owners. You can read the full budget announcement on the GOV.UK website.



National Insurance Contributions (NICs)

From April 2025, the employer National Insurance rate will rise by 1.2%, bringing it to 15%.

The NIC threshold, currently set at £9,100, will be lowered to £5,000, which means employers will start paying NICs at a lower earnings level.

However, the Employment Allowance, which offsets NI costs for eligible employers, will increase from £5,000 to £10,500. This increase is expected to exempt 865,000 employers from paying NICs, with over a million businesses paying the same as the prior year.

Personal Income Tax Thresholds

The freeze on personal income tax and National Insurance thresholds is scheduled to conclude in April 2028. Following that, personal tax thresholds will begin adjusting annually with inflation, aligning with the tax year 2028-29.

National Minimum Wage Increase

Effective from April 2025, the National Living Wage for individuals aged 21 and older will rise by 6.7%, reaching £12.21 per hour.

The National Minimum Wage for 18-20-year-olds will increase significantly by 16%, taking the rate to £10 per hour.

Business Rates Adjustments

The current 75% discount on business rates will expire in April 2025, replaced by a 40% discount capped at £110,000.

Additionally, a permanent lower rate for high-street retail, hospitality, and leisure sectors is expected to take effect from the 2026-27 tax year, aimed at reducing the tax burden on these sectors.

Corporation Tax Rate Stability

The main Corporation Tax rate for businesses with taxable profits exceeding £250,000 will stay at 25% until the next general election, providing stability for corporate tax planning.

Capital Gains Tax (CGT) Adjustments

As of 30 October 2024, general CGT rates will increase from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher rate taxpayers.

The rate for Business Asset Disposal Relief and Investors’ Relief will rise to 14% from April 2025 and further to 18% from April 2026, aligning with the standard rate.

Windfall Tax for the Energy Sector

The Energy Profits Levy, specifically targeting oil and gas companies, will increase by 3%, raising the rate to 38%. This levy will remain effective until 31 March 2030.

HMRC Compliance Enhancements

To encourage prompt payment, HMRC will raise interest rates on overdue tax liabilities.

There will also be an increase in HMRC’s enforcement activities, with a focus on hiring more compliance officers to strengthen criminal investigations and improve compliance.

Making Tax Digital (MTD) Expansion

The government confirmed its commitment to the ongoing expansion of MTD, with implementation targeted at businesses earning over £20,000 per year.



The 2024 Autumn Budget introduces key updates that will impact various facets of business operations, particularly payroll management, tax planning, and compliance. To effectively navigate these changes, businesses may need to adjust their strategies and processes. These updates are likely to influence payroll costs due to shifts in National Insurance and wage requirements, while adjustments to capital gains and corporation tax may affect budgeting and cash flow planning.

For tailored guidance on adapting to these updates, optimising payroll structures, and ensuring compliance with the latest tax policies, please contact our team. We are here to provide comprehensive support, from payroll administration adjustments to detailed tax planning solutions.

The post Changes are coming! From National Insurance increases to business rate discounts, the Autumn Budget 2024 covers a lot. We’ve outlined the biggest updates impacting businesses – read more in our new article. appeared first on City Heights.

Changes are coming! From National Insurance increases to business rate discounts, the Autumn Budget 2024 covers a lot. We’ve outlined the biggest updates impacting businesses - read more in our new article. - City Heights Changes are coming! From National Insurance increases to business rate discounts, the Autumn Budget 2024 covers a lot. We’ve outlined the biggest updates impacting businesses—read more in our new article.