Employer National Insurance rules and the Autumn Budget 2024 reform
In the United Kingdom, employers are legally required to pay Class 1 secondary National Insurance contributions (NICs) on their employees' earnings above the statutory secondary threshold. Unlike employee deductions, employer NIC is paid directly by the business and represents an additional cost of employment on top of gross wages.
Announced in the Autumn Budget 2024 and taking effect from 6 April 2025 (covering both 2025-26 and 2026-27 tax years), the main statutory employer NIC rate increased from 13.8% to 15.0%. Concurrently, the annual secondary threshold below which no employer NIC is payable was reduced from £9,100 to £5,000 per year (£416.67 per month or £96.15 per week).
Employment Allowance expansion to £10,500
To protect small businesses and lower the tax burden on growing teams, the government expanded the Employment Allowance from £5,000 to £10,500 per tax year starting 6 April 2025. Crucially, the previous £100,000 prior-year secondary Class 1 liability cap was abolished, making all eligible employers with multiple employees or non-sole-director setups eligible regardless of business scale.
Eligible employers can deduct up to £10,500.00 directly from their secondary Class 1 NIC bill over the course of the tax year. For a business employing one person on £35,000.00, their total £4,500.00 annual NIC liability is completely offset by the allowance, reducing their employer NIC bill to £0.00.
NI category letters and statutory relief thresholds
The statutory secondary threshold differs depending on the employee's National Insurance category letter. For standard adult employees (Category A), secondary contributions are charged at 15% on all earnings exceeding £5,000.00 per year.
Special relief thresholds apply for younger workers and apprentices. For employees under age 21 (Category M) and apprentices under age 25 (Category H), employers pay 0% secondary NIC on earnings up to the Upper Secondary Threshold (UST) of £50,270.00 per year. Earnings above £50,270.00 are charged at the standard 15% rate.
Worked example of employer NIC calculation
Consider an employer paying a standard Category A employee a gross annual salary of £35,000.00 in the 2026-27 tax year. The secondary threshold is £5,000.00, leaving £30,000.00 in earnings subject to secondary contributions.
Multiplying £30,000.00 by the 15% employer rate yields £4,500.00 in gross employer NIC liability. Adding this to the base salary results in a total employment cost of £39,500.00, representing an effective employer tax rate of 12.86%. If the business claims the £10,500.00 Employment Allowance, the entire £4,500.00 is relieved, bringing the net payable NIC to £0.00.
To calculate employee take-home pay and employee NIC deductions, see our UK income tax calculator.
To forecast secondary contributions on discretionary staff bonuses, use our UK bonus tax calculator.
To see how pension sacrifice saves 15% employer National Insurance, visit our UK salary sacrifice calculator.
Inputs for the employer National Insurance calculator
Tax year
The applicable UK tax year. From 6 April 2025 onwards, the statutory employer NIC rate is 15% and the secondary threshold is £5,000 per year.
Pay frequency
The payment period (annual, monthly, 4-weekly, or weekly) used to apportion the secondary threshold across the payroll cycle.
Gross pay
The gross salary, wages, bonuses, or overtime paid to the employee for the selected period before any PAYE deductions.
National Insurance category
The employee's NI category letter, such as Category A (standard), Category M (under 21), or Category H (apprentice under 25).
Claim Employment Allowance
Select whether the business claims the £10,500 annual Employment Allowance to reduce its secondary Class 1 liability.
CALCULATOR QUESTIONS
Employers NI Calculator questions
What is the employer National Insurance rate for 2025-26 and 2026-27?
Starting 6 April 2025, the standard employer Class 1 National Insurance rate is 15.0%, an increase from the previous 13.8% rate. Earnings above £5,000 per year (£416.67 per month or £96.15 per week) are subject to this 15% charge.
What is the employer secondary threshold for 2026-27?
The secondary threshold is £5,000.00 per year (£416.67 monthly or £96.15 weekly). Employers pay 0% secondary NIC on earnings below this threshold and 15% on all earnings exceeding it for standard Category A employees.
How does the Employment Allowance work from April 2025?
The Employment Allowance is £10,500.00 per tax year. Eligible employers can offset up to £10,500 of their total secondary Class 1 NIC bill. The previous £100,000 prior-year liability cap was removed in April 2025, enabling all eligible employers with qualifying staff to claim.
Are single-director limited companies eligible for Employment Allowance?
No. Limited companies where the sole employee is also the sole director do not qualify for the Employment Allowance. At least one additional employee or non-director employee must be paid above the secondary threshold for the company to claim.
Do employers pay NIC on employees under 21 or apprentices under 25?
Employers pay 0% secondary NIC on earnings up to £50,270.00 per year for employees under 21 (Category M) and apprentices under 25 on recognized statutory schemes (Category H). Earnings above £50,270.00 are charged at the standard 15% rate.