When the employer National Insurance changes were announced in the 2024 Autumn Budget, they dominated the business pages for weeks. More than a year on, the noise has faded, but the cost has not.
The 15% rate and the £5,000 threshold are simply the baseline now, adding to every payroll run, and many employers have never gone back to check whether they are managing that cost as well as they could.
Read on to learn where employer National Insurance stands in 2026, what it costs in practice, and the levers that can bring the bill down – some of which a surprising number of businesses still miss.
Where Employer National Insurance Stands in 2026
The reforms that took effect in April 2025 have carried straight through into the 2026/27 tax year with no change to the headline figures. If anything, the thresholds are now more firmly fixed, having been frozen until 2030/31. The numbers that matter to most employers are:
- The rate is 15% on earnings above the secondary threshold, up from 13.8% before April 2025.
- The secondary threshold is £5,000 a year – around £417 a month, or £96 a week – down from £9,100 before the reforms.
- The Employment Allowance is £10,500, and the old £100,000 eligibility cap has gone.
- Class 1A National Insurance, charged on benefits such as company cars and private medical cover, is also 15%.
Because these figures are frozen while wages keep rising, the share of your payroll caught by employer National Insurance grows a little each year even if nothing else changes. You can see the current position in full on the Gov.uk rates and thresholds page.
What It Costs in Practice
The combination of a higher rate and a much lower threshold means you start paying employer National Insurance at modest salaries. Take an employee earning £25,000.
You now pay 15% on everything above £5,000 – that is £20,000 of their pay – which comes to £3,000 a year. Under the old 13.8% rate and £9,100 threshold, the same employee cost roughly £2,194, so the change added about £806 for that one person.
The same calculation across a range of salaries shows how the extra cost grows as pay rises. These figures are per employee, before any Employment Allowance is applied:
| Employee salary | Employer NI before April 2025 | Employer NI now | Yearly increase |
|---|---|---|---|
| £15,000 | £814 | £1,500 | £686 |
| £25,000 | £2,194 | £3,000 | £806 |
| £35,000 | £3,574 | £4,500 | £926 |
| £50,000 | £5,644 | £6,750 | £1,106 |
Across a small team the effect adds up, and it comes alongside a rising wage floor. The National Living Wage rose again to £12.71 an hour from April 2026, so employers with lower-paid staff are absorbing higher gross wages and higher National Insurance on those wages at the same time.
Running the numbers for your own payroll is the only way to know your real position, and it is worth doing before you set budgets or agree pay rises.
The Employment Allowance: The First Thing to Check
For many smaller employers, the Employment Allowance changes the picture completely. It lets eligible businesses reduce their annual employer National Insurance bill by up to £10,500, and since the £100,000 cap was removed, far more businesses now qualify. For a business whose total employer National Insurance comes to less than £10,500, the allowance can remove the bill entirely.
The catch is that it has to be claimed actively through your payroll software. It is not applied automatically, so if you have missed it in the past, you may still be able to claim for the previous four tax years, subject to the rules that applied at the time. Most employers with at least one qualifying employee can claim, but there are some exclusions:
- Companies whose only employee is a director earning above the secondary threshold.
- Employers that do more than half their work in the public sector, unless they are a charity.
- Connected companies and charities, which share a single allowance between the group.
- People you employ for personal or domestic work, such as a nanny or gardener.
If you are not certain whether you claimed it this year, that is worth checking today, because for some businesses it is the difference between a real bill and none at all. You can confirm the current rules and claim through the Gov.uk Employment Allowance guidance.
Other Ways to Manage the Cost
Beyond the allowance, there are several legitimate ways to keep employer National Insurance in check, and the right mix depends on how your workforce is made up.
Some employees carry a zero rate of employer National Insurance up to a higher threshold than usual, which is worth knowing when you hire or plan roles. The relief applies to particular groups, and the threshold is not the same for all of them:
- Employees under 21 and apprentices under 25 – zero rate on earnings up to £50,270.
- Qualifying veterans in their first year of civilian employment – zero rate up to £50,270.
- Eligible employees in a designated Freeport or Investment Zone special tax site – zero rate up to £25,000.
For owner-managed companies, setting a director’s salary at or near the £5,000 threshold and taking further profit as dividends remains a common way to limit National Insurance, though it should be weighed against Corporation Tax and dividend planning as a whole.
Salary sacrifice is another established route, particularly for pension contributions, where both the employer and the employee currently save on National Insurance on the amount sacrificed. That saving is changing, though, so it is worth understanding before you build a strategy around it.
What’s Coming Next
The most important change on the horizon affects salary sacrifice. From 6 April 2029, only the first £2,000 of pension contributions made through salary sacrifice each year will stay free of National Insurance.
Anything above that will attract both employer National Insurance at 15% and employee National Insurance on the excess, though income tax relief on the whole contribution is unchanged. There is time to prepare, but employers who lean heavily on salary sacrifice for higher earners should factor it into longer-term planning now rather than later.
More broadly, the freeze on National Insurance thresholds until 2030/31 means employment costs will continue to rise as pay increases, even without further rate changes.
Talk to Double Point
Employer National Insurance is now a fixed part of the cost of running a team, but how much you pay is not fixed at all. Claiming the right allowances, structuring pay and benefits sensibly, and planning ahead for changes like the 2029 salary sacrifice cap can all make a real difference to what leaves your account each month.
At Double Point, our chartered accountants can take this off your plate. Working from your payroll setup and pay structure, we can:
- Calculate exactly what the current rules cost your business.
- Check you are claiming every allowance and relief you qualify for.
- Structure pay, dividends and benefits in a tax-efficient way.
- Plan ahead for changes such as the 2029 salary sacrifice cap.
It all forms part of a wider tax planning approach built around your business. To find out where you could save, book a consultation with us today.