National Insurance Increase: Tough News for Employers

Right, let's be honest, the Chancellor hasn't exactly delivered good news in the latest Budget. From 6 April 2025, we employers are facing a rise in National Insurance Contributions (NICs). It's a tough pill to swallow, especially when many businesses are already struggling.

What's Changing?

The rate for secondary Class 1 NICs is increasing by 1.2 percentage points, from 13.8% to 15%. To make matters worse, the threshold where we start paying these contributions is dropping from £9,100 to £5,000. It's enough to make you wonder if a holiday in the Bahamas might be a better career move!

Is There Any Good News?

Well, it's not all doom and gloom. The Employment Allowance is getting a boost, rising from £5,000 to £10,500. This will provide some relief for the smallest businesses. Larger businesses will also be able to benefit from the Employment Allowance again from April 2025, which is a welcome change. However, if you're a personal service company with just yourself as the director and employee, you're still out of luck.

What About Young Workers and Apprentices?

The thresholds for those under 21, apprentices under 25, veterans starting their first civilian job, and those working in special tax sites remain unchanged. However, they'll still pay the new 15% rate on any earnings above those thresholds.

Breaking Down the Jargon

• Class 1A and 1B NICs: These are also going up to 15%. This covers things like taxable benefits and PAYE Settlement Agreements.

• Impact: This increase will be felt by businesses across the board, but especially those with lots of employees on lower wages.

• Mitigation: Don't forget to claim your Employment Allowance if you're eligible – it can make a real difference.

What Can We Do?

While we can't change the new rules, we can be savvy about how we manage them. Claim that Employment Allowance if you can, and consider your workforce. Employing young people or veterans might help reduce your NICs bill.

Keep Calm and Carry On

It's undeniably a challenging time for businesses, but we're a resourceful lot. We'll navigate these changes and come out stronger on the other side. Let's focus on making smart decisions and supporting each other through these tricky times.