It’s hard to miss the headline: from April 2025, Employer’s National Insurance is going up to 15%.
That’s a jump of over 8.5% on the rate you were paying before (up from 13.8%), and it’s easy to assume this means your staff costs are about to surge. But buried beneath that headline are two changes that might make your total NI bill less painful than you think – or even reduce it altogether.
Let’s take a step back and look at what’s really happening – and why some SME business owners might actually come out ahead.
1. Employer NI rises to 15% – so yes, employment is more expensive
From April, you’ll be paying 15% Employer’s NI on all employee earnings above £5,000 (lower than the old threshold of ~£9,100).
That means:
- You’re paying NI on more of each salary, and
- You’re paying it at a higher rate.
For example, if you’ve got an employee on a £30,000 salary, your Employer NI bill per head jumps by £866 per year under the new rules. Scale that across your team and it starts to add up fast.
2. The NI Allowance doubles to £10,500 – and you’ll likely benefit
Here’s the bit many people are missing: the Employment Allowance (i.e., a discount off your Employer NI bill) is increasing from £5,000 to £10,500 per year.
If you qualify (and most small businesses will), that’s a £10.5k reduction straight off your NI bill – every single year.
So while NI costs are going up per employee, there’s now a much bigger buffer to soften the blow.
Let’s take that same £30k salary example again. Under the new rules:
- Each employee costs you ~£2,583 in Employer NI
- But the first £10,500 of your total NI bill is wiped out
- So you don’t feel the full hit unless you’ve got several employees
3. No more £100k barrier – bigger SMEs now get the allowance too
Previously, if your Employer NI bill in the prior year was over £100,000, you were excluded from claiming the Employment Allowance. So if you were a growing SME, you may have already lost access to the relief long before reaching scale.
From April 2025, that cap is gone.
Whether your NI bill last year was £10k or £200k, you can now knock £10.5k off this year’s bill. It’s a meaningful saving that medium-sized businesses couldn’t previously access.
So, could you actually be better off? Let’s run the numbers
Let’s say your employees each earn £30,000. Here’s what the Employer NI picture looks like before and after April 2025:
So in this scenario, if you have fewer than six employees on £30k, you’re actually better off or no worse off than before. And even with six staff, you’re only marginally above break-even on NI cost.
And here’s the kicker: you now get relief where you didn’t before
Think back to that £100,000 Employer NI cap.
To hit that level previously, you’d have needed around 38 employees on £30k salaries. Once you passed that, you’d have been excluded from the Employment Allowance – and lost out on a valuable relief.
Under the new rules, even if your Employer NI bill is £150k, £250k or more, you still get the £10,500 allowance. So yes – you’re paying more per employee, but you’re also finally able to reclaim £10,500 you weren’t entitled to last year.
Final thought: Don’t just look at the 15% headline
Yes, Employer NI is increasing – and for some businesses, this will be a material rise in cost.
But don’t assume you’re worse off without looking at the detail.
For many SME owners, this is actually a net neutral or even a net gain situation:
- Fewer than 5–6 employees? You’re probably better off overall.
- Previously excluded from relief due to the £100k cap? You now get £10.5k back.
- Growing team? You’ll pay more – but you’ve got more tools to offset it than you had before.
So before you panic about the 15%, check your own numbers – you might be pleasantly surprised.
