Starting in April 2025, the rate of employers' National Insurance Contributions (NICs) will rise, affecting staff costs, cash flow, and profit margins for many small and medium-sized enterprises (SMEs).
Chancellor Rachel Reeves announced in the 2024 Autumn Budget that the NIC rate for employers will increase from 13.8% to 15%. Additionally, the threshold at which employers begin paying NICs will decrease from £9,100 to £5,000 per year.
To help small businesses manage these higher NIC costs, the Employment Allowance, which allows eligible employers to reduce their NIC liability, will be raised from £5,000 to £10,500, and the £100,000 eligibility threshold will be removed.
While not all companies will be affected, some will benefit from the increased Employment Allowance. However, good news! Employers recruiting apprentices under 25 years old do not have to pay the employer contributions.
Nottingham College can provide support and advice around apprenticeships that will help businesses adapt to labour market challenges.
