What Changes to National Insurance Rates Were Announced This Year

Introduction

Every year the UK government may adjust National Insurance contribution (NIC) rules, including rates, thresholds, and allowances. These changes influence take-home pay, employer costs, and contributions for self-employed individuals.

In the latest set of announcements, several important changes were confirmed from 6 April 2025. Below is a detailed look at those changes, how they differ from the previous year, and what you should watch out for.

Key changes announced for 2025 26

Employer NIC rate increase

From 6 April 2025, the rate of employer Class 1 NIC (secondary contributions) will increase from 13.8 percent to 15 percent. Vista Partners+3Moneysoft+3Unit4+3

This additional 1.2 percentage points means that employers will pay more in NIC for each employee whose earnings exceed the employer threshold. CIPP+3Streets Accountants+3Moneysoft+3

Lowered employer threshold

Simultaneously, the secondary threshold (the salary level above which employer NIC becomes payable) will drop from £9,100 per year to £5,000 per year. Vista Partners+4Streets Accountants+4Moneysoft+4

This means employers will begin paying NICs on lower earnings than before. Streets Accountants+2Moneysoft+2

Employee NIC rates remain

There is no change to the primary (employee) NIC rates or thresholds for 2025 26. The standard employee rate for earnings between the primary threshold and the upper earnings limit stays at 8 percent, and 2 percent on earnings above the upper limit. CIPP+3House of Commons Library+3GOV.UK+3

Thus, staff will not see changes to their widget of NIC contributions (unless other factors intervene).

Changes to benefits in kind (Class 1A) and PSAs (Class 1B)

The rate for Class 1A NICs (on benefits in kind, such as a company car or other perks) is increased to 15 percent for 2025 26, up from 13.8 percent in the previous year. Vista Partners+3GOV.UK+3CIPP+3

Likewise Class 1B NICs (for PAYE Settlement Agreements) will also be charged at 15 percent. CIPP+1

Voluntary NICs (Class 2 and Class 3)

Voluntary NIC rates also rise somewhat. For 2025 26:

Class 2 will go to £3.50 per week (up from £3.45). rapidformations.co.uk+1

Class 3 increases to £17.75 per week (from £17.45). rapidformations.co.uk+1

These voluntary classes are used by individuals wanting to fill gaps in their National Insurance record (for example to protect or build their entitlement to State Pension). GOV.UK+1

Impact and implications

For employers

Higher cost burden: Every employee earning above £5,000 will now attract employer NIC at 15 percent instead of 13.8 percent. CIPP+3Moneysoft+3Streets Accountants+3

Reduced threshold: Employers will begin paying NIC earlier in employees’ earnings (at the £5,000 mark). Streets Accountants+2Moneysoft+2

Offset via Employment Allowance: To ease pressure on smaller employers, the Employment Allowance rises from £5,000 to £10,500 per year. Moneysoft+3Streets Accountants+3Vista Partners+3

Expanded access to the allowance: The previous cap (employers with NIC under £100,000) is removed, meaning more businesses may qualify. Vista Partners+2Streets Accountants+2

For employees

No direct change in NIC deductions: Their NIC rates and thresholds stay the same for the 2025 26 year. GOV.UK+3House of Commons Library+3Vista Partners+3

Possible indirect effects: Employers may adjust wages, benefits, or hiring to cope with extra costs, though this is speculative.

For self-employed

The structure of Class 4 NICs (paid on business profits) will also be adjusted in line with profit thresholds. Vista Partners+1

For those paying Class 2 NICs voluntarily, rates will increase, as noted above. rapidformations.co.uk+1

Summary of rate changes

NIC Type Previous Rate / Threshold New Rate / Change Notes
Employer Class 1 13.8 % above £9,100 15 % above £5,000 From 6 April 2025
(secondary) Moneysoft+2Streets Accountants+2

Class 1A & Class 1B 13.8 % 15 % Benefits, termination
awards etc GOV.UK+2CIPP+2

Employee Class 1 8 % / 2 % Same No changes for 2025 26
House of Commons Library+2GOV.UK+2

Class 2 (voluntary) £3.45/week £3.50/week For voluntary contributors
rapidformations.co.uk+2GOV.UK+2

Class 3 (voluntary) £17.45/week £17.75/week To fill gaps in NI record GOV.UK+1

Employment Allowance £5,000 £10,500 Eligibility extended
Streets Accountants+2Vista Partners+2

What to watch for and next steps

Employers should update payroll systems and prepare for higher NIC costs.

Small employers should check eligibility for the increased Employment Allowance.

Employees should monitor their payslips to ensure deductions remain correct.

Self-employed individuals should recalculate contributions based on new thresholds and rates.

Conclusion

The key National Insurance changes announced this year largely affect employers. From 6 April 2025, employer NICs rise to 15 percent and the threshold for paying them falls to £5,000. Employee NIC rates stay the same, but voluntary contribution rates (Class 2 and Class 3) will increase.

These changes increase costs for businesses but the boost to the Employment Allowance helps soften the impact for many. Keeping up to date with these adjustments is essential for payroll accuracy and compliance.

If you like, I can also prepare a simple guide or cheat sheet you can use to check impact for your business or staff—would you like me to do that?