Employer NI Rise Impact Calculator (April 2025) Trending

From April 2025, the employer National Insurance rate increased from 13.8% to 15%. Simultaneously, the Secondary Threshold (the point at which employer NI becomes payable) dropped from £9,100 to £5,000 per year. This double change significantly increases the cost of employing staff, particularly for lower-paid workers.

The Employment Allowance was increased to £10,500 from April 2025 to partially offset the impact for small businesses. Eligible employers can deduct this from their total employer NI bill. Companies connected to other companies and those with a sole director and no other employees are not eligible.

This calculator models the cost impact per employee and across your total payroll. Enter each employee's salary to see the increase in employer NI versus the previous 13.8% rate and £9,100 threshold. It also shows whether the Employment Allowance covers the increase for your business.

Employer NI changes April 2025 — major shift. Pre-April 2025: 13.8% above £9,100/year secondary threshold. From April 2025: 15% above £5,000/year secondary threshold. Two simultaneous changes: rate up 1.2 percentage points AND threshold dropped £4,100. Combined cost: small/medium businesses see £900-£3,000+/year more NI per employee. Annual UK Treasury revenue gain: £25 billion (largest UK employer tax rise in 30 years). Particularly hits: hospitality, retail, care sectors with many lower-paid workers.

Cost impact per employee. Sample £35,000 employee: old £35,000 − £9,100 = £25,900 × 13.8% = £3,574. New £35,000 − £5,000 = £30,000 × 15% = £4,500. Increase £926/year per employee. Sample £25,000 employee: old £2,194; new £3,000 = £806 rise. Sample £55,000 employee: old £6,335; new £7,500 = £1,165 rise. £150k employee: old £19,464; new £21,750 = £2,286 rise. Most expensive change for businesses with workforce £25-£35k earnings band.

Employment Allowance — partial offset. Raised to £10,500 April 2025 (was £5,000). Reduces employer NI bill by up to £10,500/year. Eligibility: small businesses ONLY — total NI bill under £100,000 previous year. EXCLUDED: limited companies with single director (single-employee company restriction since 2016); employers in public sector (mostly); employers above £100k NI threshold. Sample 5-employee small business: £10,500 saving against ~£15-£20k NI bill — significant. Larger employers: no relief, full hit.

Sectors hardest hit by employer NI rise. Hospitality (high % of staff £20-£35k earnings band): typical pub/restaurant £8,000-£25,000/year extra NI. Retail: similar profile, costs eat margins. Social care: low margins + high headcount; many providers warning of closures. Logistics/warehouse: £15,000-£40,000 extra/year typical operator. Construction: medium impact (higher-skilled workers above worst-hit bracket). Tech/professional services: smaller per-employee impact (most over £50k) but still meaningful at scale.

Business responses to NI rise. Common 2025-2026 responses: wage freeze (no real-terms rises offered); reduced pension contributions; reduced bonuses; recruitment pause; redundancies (sectors with low margins); price rises passed to customers (driving sector inflation); investment in automation/AI to reduce headcount. Treasury argument: businesses with higher margins absorb cost. Reality: many small businesses cannot absorb £5-£15k/employee extra without action. Self-employed status increasingly attractive — but watch IR35.