Class 1 Secondary NICs rate to rise to 15% with threshold lowered to £5,000

Employer National Insurance contributions rise from 13.8% to 15% and the point at which they become payable falls from £9,100 to £5,000 a year from 6 April 2025. The change was announced at Autumn Budget 2024 and given effect by the National Insurance Contributions (Secondary Class 1 Contributions) Act 2025, which received Royal Assent on 3 April 2025¹.

The rate applies to earnings above the Secondary Threshold, which falls from £9,100 to £5,000 a year, or from £175 to £96 a week¹. The Act substitutes "15%" for "13.8%" in both the Great Britain and Northern Ireland legislation, and the amendments come into force on 6 April 2025¹. The weekly threshold change is set out in the Social Security (Contributions) Regulations 2001, with the monthly equivalent falling from £758 to £417¹.

The same instrument confirms the threshold will be frozen at £5,000 up to the 2027-28 tax year, and that the rate rise applies from the 2025-26 tax year². The Secondary Threshold had previously been frozen at £9,100 by the previous government up to 2027-28².

Sources:³

Alongside the rate rise, the Employment Allowance increases from £5,000 to £10,500 per eligible employer, and the restriction that excluded employers with secondary Class 1 liability of £100,000 or more in the previous tax year is removed, both from 6 April 2025¹. The allowance increase and the lifting of the £100,000 employer NICs liability restriction were also noted in HMRC's tax relief statistics⁴.

The zero-rate relief for employers of qualifying veterans, which applies up to salaries of £50,270, was extended until April 2026². The Freeport and Investment Zone Upper Secondary Thresholds remain at £481 a week, or £25,000 a year, for 2025-26².

Employee contributions are unchanged: the main primary rate stays at 8% on earnings between the Primary Threshold and the Upper Earnings Limit, and 2% above it, with the Primary Threshold fixed at £12,570 a year and the Upper Earnings Limit at £967 a week for 2025-26². The Lower Earnings Limit rises from £123 to £125 a week².

For the self-employed, the Class 2 weekly flat rate rises from £3.45 to £3.50 and the Small Profits Threshold from £6,725 to £6,845, both in line with September CPI². Class 4 rates remain at 6% between the Lower and Upper Profits Limits and 2% above, with the Lower Profits Limit fixed at £12,570 and the Upper Profits Limit at £50,270². Class 3 voluntary contributions rise from £17.45 to £17.75 a week from 6 April 2025².

HMRC's tax relief statistics note that the forecast cost of National Insurance contributions relief on pension schemes increases in 2025 to 2026 as a result of the rate and threshold changes⁴. The publication also records that the Class 1 Secondary NICs rate applied above the Secondary Threshold will increase from 13.8% to 15% in 2025 to 2026, and the threshold will be lowered from £9,100 to £5,000⁴.

Why it matters for households

Employer National Insurance is paid by the employer, not deducted from a payslip, so the rate and threshold change does not alter the National Insurance deducted from employees' wages. Employee rates and thresholds for 2025-26 are unchanged².

The practical effect for households is indirect. The cost of employing staff rises for employers whose wage bills sit above the new £5,000 threshold, and the increase applies from 6 April 2025¹. Which? reported that before the Budget some critics suggested such a change could have a knock-on effect on employees, through employers offering lower pay increases or less generous employment benefits in future⁵. The sources do not quantify any such effect.

Smaller employers are affected differently: the Employment Allowance rises to £10,500 and the £100,000 liability restriction is removed from 6 April 2025¹. The allowance is available per eligible employer³.

Anyone whose employer operates salary sacrifice arrangements, or who is considering one, is affected only through the employer's National Insurance position; the sources do not set out the effect on individual arrangements.

What happens next

The rate and threshold changes take effect on 6 April 2025¹. The Secondary Threshold is frozen at £5,000 up to the 2027-28 tax year². The veterans' relief extension runs until April 2026². NICs rates, limits and thresholds are set annually through the re-rating exercise, and the 2025 regulations set them for tax year 2025-26 only².

For background on how contributions work, see National Insurance: classes, rates and what it pays for, Class 2 National Insurance: has it been abolished? and National Insurance: self-employed and employees compared.