Employer NIC Rate Increase 2025 Impact Calculator

Two major changes from 6 April 2025: (1) The employer NIC rate increased from 13.8% to 15%. (2) The Secondary Threshold (the salary point at which employer NIC starts) fell from £9,100/year to £5,000/year. Both changes increase employer payroll costs.

For a typical employee earning £32,000: employer NIC increased from £3,162 to £4,050 per year — an extra £888/employee. For 10 employees, that's approximately £8,880 extra per year (before Employment Allowance offset).

From April 2025, employers pay NIC on earnings above £5,000 per year (£96/week, £416/month). This is down from £9,100/year (£175/week). This means employers now pay NIC on a much wider range of wages — affecting even part-time and minimum wage workers.

For small employers, yes — EA doubled to £10,500. For a 5-person business, the £5,500 EA increase may more than offset the rate rise. For larger businesses without EA, the full 1.2% rate increase and lower threshold applies.

No employer is exempt from the rate increase. The Employment Allowance provides relief for smaller businesses. Freeport and Investment Zone employers have specific NIC holiday reliefs on qualifying jobs. Veterans employment relief also continues.

At National Living Wage (£12.21/hr from April 2025), a 16-hour week employee earns ~£10,127/year. With the old £9,100 threshold, NIC applied to £1,027. With the new £5,000 threshold, NIC applies to £5,127 — roughly 5× more employer NIC on the same minimum wage employee.

Yes. Salary sacrifice for pensions, electric cars, cycle to work, childcare vouchers etc. reduces the gross salary on which employer NIC is calculated, at the new 15% rate — making salary sacrifice even more valuable for employers.

The employer NIC increase does not directly affect sole traders' self-employed NIC (Class 2 and Class 4). It primarily affects employers. Some self-employed workers may face reduced contract rates or reduced employment opportunities as employers manage payroll costs.