27 November, 2024
Rachel Reeves recently announced that a series of changes would be introduced, as part of the new Labour Party Budget. One of the most critical – and widely discussed – parts of the new Budget is the increase in the amount of National Insurance (NI) that needs to be paid by employers.
Although the government didn't change NI, income tax and VAT for working people, the employer NI rates did increase.
So, we have shared a quick guide for what this will mean for businesses, moving forward.
Below, you can see the differences between the old rates and the new rates, when these changes will take effect, and an average NI increase breakdown, to help you get a clearer sense of how much more your business will be paying.
What are the new Employer National Insurance Rates?
As part of the Budget, the government announced that employers will need to increase the amount of NI that they pay.
Currently, businesses pay a rate of 13.8% NI, for employees’ earnings that exceed £9,100 (every year).
However, this rate will be increasing to 15%. Furthermore, NI will now need to start being paid on employees’ earnings that exceed a new threshold of £5,000.
Furthermore, the employment allowance for businesses will increase from £5,000 to £10,500.
How much will I need to pay?
Sole traders:
Below, you can find a breakdown of average NI increases for businesses.
These outline the increase in NI for employers following the new legislation, based on a number of example employee annual salaries:
£30,000 annual salary = Employer NI contribution of £3749.40 per year (an £865 increase)
£40,000 annual salary = Employer NI contribution of £5249.40 per year (a £985 increase)
£50,000 annual salary = Employer NI contribution of £6749.40 per year (a £1105 increase)
£60,000 annual salary = Employer NI contribution of £8249.40 per year (a £1225 increase)
£80,000 annual salary = Employer NI contribution of £11,249.40 per year (a £1465 increase)
£100,000 annual salary = Employer NI contribution of £14,249.40 per year (a £1705 increase)
Not sure how much your Employer NI contribution will increase for your staff?
Contact our team to set up an appointment with one of accountants, we can guide you through the changes and identify exactly how much more you will be paying, and help manage your accounts.
When is this change coming in?
These changes will come into effect from 6 April 2025. As such, employers’ NI contributions will be increasing from the start of the 2025/26 tax year.
If you are concerned about the new NI contribution requirements for employers, and how this will affect your business, then having a Chartered Accountant like Keith Willis Associates will ensure your business is supported throughout this change, and beyond.
Can an accountant help manage my tax and employer national insurance contributions?
In short, yes, absolutely.
At Keith Willis Associates, our skilled team can help your business manage your accounting, tax and national insurance contributions, ensuring a seamless transition, and full legal compliance.
By enlisting our assistance, you can have a fully trained specialist managing your tax and employer national insurance contributions, allowing you to focus on managing your business.
To find out more about our services, and how we can support your business, don’t hesitate to get in touch.
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