National Insurance contributions

Highlighting employees, employers and the self-employed.

Employees and employers

The government announced that it will increase the employer rate from 13.8% to 15% from 6 April 2025. The main rate of Class 1 employee National Insurance contributions (NICs) is 8%.

The Secondary Threshold is the point at which employers become liable to pay NICs on an individual employee's earnings and is currently set at £9,100 a year. The government will reduce the Secondary Threshold to £5,000 a year from 6 April 2025 until 6 April 2028 and then increase it by Consumer Price Index (CPI) thereafter.

The Employment Allowance currently allows businesses with employer NICs bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NICs bill. From 6 April 2025 the government will increase the Employment Allowance from £5,000 to £10,500 and remove the £100,000 threshold for eligibility, expanding this to all eligible employers with employer NIC bills.

Comment

For some businesses, this will create a large additional NICs cost from April 2025. It remains to be seen what the implications are for both the economy and the job market.

The self-employed and NICs

From 6 April 2025 the rates of Class 4 self-employed NICs are 6% and 2%. For Class 2 NICs from 6 April 2025:

  • Self-employed people with profits of £6,845 and above get access to contributory benefits, including the State Pension, through a National Insurance credit, without paying Class 2 NICs.
  • Those with profits under £6,845 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension will continue to be able to do so.

For those paying voluntarily, the government will also increase Class 2 and Class 3 NICs to £3.50 and £17.75 respectively for 2025/26.

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After working with Nicholas Charles for a year, we brought him on to join our board advisory team for BankToTheFuture.com because of his unique combination of financial tax advice, commercial understanding and ability to introduce the right connections at the right time. Nicholas has provided tax advice to our investors, facilitated introductions to investors as well as help us to implement controls and procedures to get the right balance of compliance, responsible procedures and good business practices. If you want somebody that understands the commercials of business and deal making combined with the technical skills of finance, tax and increasing shareholder value, Nicholas Charles is your man.

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Nicholas has been an active supporter of our charity, and the Charles Group have sponsored our last three summer parties. He understands family businesses like ours but more importantly the need to give back to the local community and the life changing differences that can be brought about by charities. This is why we quickly became a client of the Charles Group. Nicholas appreciates that having a purpose greater than the individual needs of members can bring a family closer together as well as inspire the next generation. We admire Nicholas’ authentic approach towards Family Prosperity.

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I have worked with the Charles Group for 2 years on some very exciting projects and his ability to listen, provide objective advice and support my goals and ambitions has been a tremendous asset to me and my businesses. Nicholas cares deeply about those he works with and seeks to ensure great outcomes for all.

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The Charles Group has been our trusted accountants since we founded B-Engaged in 2013. Over the years, they’ve become an integral part of our journey, consistently going above and beyond to help us save money, optimize our structures, and minimize tax liabilities. They are more than accountants—they are key partners in our success.

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From our early days as a startup to becoming one of the largest suppliers to Assos and River Island, The Charles Group has been a constant and invaluable partner. They’ve played a vital role in reducing our overheads, analysing and advising on client profitability, setting up our internal bookkeeping systems, and providing invaluable business guidance. Their expertise has also helped us manage and reduce our growing tax liabilities. The team at The Charles Group has truly become part of our business family.

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