The Autumn Budget 2024 brought notable changes to National Insurance Contributions (NICs), impacting both employers and the self-employed. With adjustments set to take effect from April 2025, businesses and individuals need to understand how these changes will affect their finances and take action to mitigate the impact.

Changes to National Insurance Contributions

For employers

From 6 April 2024, Class 1 employee NICs will remain at a main rate of 8%, while the employer rate is currently 13.8%.

However, starting from 6 April 2025, the employer NIC rate will rise to 15%. This increase coincides with a reduction in the Secondary Threshold (ST) — the earnings point above which employers begin paying NICs — from £9,100 to £5,000. This lowered threshold will remain in place until 2028, after which it will adjust in line with the Consumer Price Index (CPI).

The government has also revised the Employment Allowance, which offsets employer NICs bills. From April 2025, the allowance will increase from £5,000 to £10,500, with the removal of the £100,000 eligibility cap, extending this benefit to all qualifying employers.

For self-employed

For the self-employed, Class 4 NIC rates remain unchanged at 6% and 2%, while Class 2 NICs have seen adjustments that provide National Insurance credits to those earning £6,725 or more without requiring a financial contribution.

Voluntary Class 2 NIC payments remain an option for those earning below this threshold to maintain access to contributory benefits.

Impact on employers

The changes will significantly increase the cost of employment for many businesses, particularly those with a high number of employees. Employers will need to pay NICs at the new 15% rate on earnings exceeding the £5,000 threshold. This adjustment represents a substantial financial shift, with some businesses anticipating as much as a 50% increase in their NIC contributions.

Smaller businesses may find some relief in the enhanced Employment Allowance, which could offset the increased NIC costs entirely. However, employers with a single director/employee setup will remain ineligible for this allowance, requiring careful financial planning to absorb the additional expenses.

Employers with staff earning minimum wage must also prepare for the interplay between increased NIC rates and higher National Minimum and Living Wage rates. Forward budgeting and financial forecasting are essential to navigate these compounded cost pressures.

Impact on the self-employed

For self-employed individuals, the primary rates for Class 4 NICs remain steady, reducing immediate financial concerns.

However, those earning below the £6,725 threshold will need to assess whether maintaining access to contributory benefits via voluntary Class 2 NICs is worthwhile. While there are no drastic changes to their NIC liabilities, the self-employed must consider how these adjustments could influence their long-term financial planning, especially regarding state pension eligibility.

We understand that the changes will have a considerable impact on employers so if you would like our support in financial forecasting, please do contact us. You can call us on 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it.