April 2025 NIC Shake-Up: What Employers and Company Directors Need to Know
Andy Hagues, 13/3/2025
April 2025 brings one of the biggest shake-ups to employer National Insurance (NIC) in recent memory. If you’re a business owner or company director, these changes will directly impact your payroll costs and how you pay yourself. Below, we break down the upcoming changes, their impact on employers and directors, and the steps you need to take to prepare.
Key Tax Changes Effective April 2025
- Employer NIC rate increase: The rate will rise from 13.8% to 15%.
- Employer NIC threshold drop: The earnings threshold for NIC contributions will fall from £9,100 to £5,000.
- Employment Allowance increase: The allowance will rise from £5,000 to £10,500, offering tax relief for eligible businesses.
How These Changes Will Impact Employers
Most employers will see an increase in payroll costs due to the higher NIC rate and lower threshold. However, the expanded Employment Allowance will offset these costs for smaller businesses.
- Higher NIC costs: Businesses with multiple employees will see increased payroll tax obligations.
- Smaller employers benefit: Many small businesses may pay less due to the enhanced Employment Allowance.
- Cashflow considerations: Employers should budget for the increased NIC rate and adjust their payroll accordingly.
Optimising Director Salaries in 2025/26
For company directors, determining the most tax-efficient salary will depend on whether your company qualifies for the Employment Allowance.
| Salary Level | Employer NIC Due | Outcome |
|---|---|---|
| £12,570 (Full Personal Allowance) | £1,136* (Covered by Employment Allowance if eligible) | Maximises tax-free income and deductible salary. |
| £5,000 (Minimal Salary) | £0 | Avoids NIC but does not maximise tax efficiency. |
*If eligible for Employment Allowance, the NIC cost is fully offset.
Actionable Steps for Businesses
- Recalculate payroll costs and budget for higher NIC expenses.
- Determine Employment Allowance eligibility and claim it as soon as possible.
- Review director salary and dividend strategies to optimize tax efficiency.
- Communicate changes to your team to ensure payroll compliance.
Conclusion
The April 2025 NIC changes introduce significant tax implications for businesses. With proper planning, companies can minimize costs and take advantage of available tax reliefs. At Nuvo, we help businesses adapt to these changes efficiently. Contact us today for a tailored tax strategy.
