From 6 April 2025, NIC threshold changes land that will affect every employer running payroll. The employer’s National Insurance rate rises to 15 per cent, and the secondary threshold – the point at which employer NIC kicks in – drops sharply to £5,000 a year, or £417 a month. In weekly terms, that’s £96. These are not small tweaks. Together they pull more small firms into employer NIC sooner, and increase the cost of each pound of salary above that threshold (HMRC, 2025). At the same time, Class 1A and 1B NIC on benefits in kind also move to 15 percent, meaning benefits from cars to health insurance carry a higher on-cost too.
Why does this matter? First, more casual, part-time and seasonal roles will now cross the employer NIC line. Second, payroll decisions that felt routine last year – bonuses, overtime, benefits, director salaries – will have bigger cost and compliance consequences. Third, the labour market remains dynamic: early estimates show around 30.2 million people on UK payrolls in May 2025, with regular pay growth still elevated by historic standards (ONS, 2025). As pay changes ripple through, the risk of errors and missed reliefs grows.
We’re talking about real money and real time. Payroll is one of those functions where detail, deadlines and constant updates pile up quickly. Outsourcing doesn’t just keep you compliant – it protects cashflow, reduces admin for directors, and gives you clean data for better decisions. If you want a calm, accurate payroll that just works, we’ve got this.
What the NIC threshold changes mean in pounds and pence
Under the 2025/26 rules, the secondary threshold falls from £9,100 to £5,000 a year, while the employer NIC rate rises from 13.8 percent to 15 per cent. In practice, once an employee’s annual earnings pass £5,000, you pay 15 percent employer NIC on the slice above that level. The same 15 percent rate applies to Class 1A and 1B NIC for most benefits in kind.
Payroll software will calculate it – but getting the setup right is on you. Incorrect thresholds, wrong category letters, or mis-set benefits can cascade into underpayments, penalties and rework later.
External reference: See Rates and thresholds for employers 2025 to 2026 on GOV.UK for the full list, including Freeport and Investment Zone thresholds (HMRC, 2025).
Why more small firms are exposed this year
Two forces are at play. First, lower thresholds mean more roles cross into employer NIC liability sooner. Second, wage levels remain higher than a few years ago. Average weekly earnings stood at £680 for regular pay in July 2025, with annual growth still elevated versus pre-pandemic norms (ONS, 2025). The Office for Budget Responsibility has also noted that firms are likely to pass on some higher employer NIC costs or adjust pay and benefits as budgets tighten (OBR, 2025). That combination pulls more small employers into earlier and more frequent payroll decisions – from overtime approvals to benefit renewals.
Payroll hotspots we’ll help you manage
- Director pay: Director salaries set near the primary threshold still attract employer NIC once total annual earnings push past £5,000. Get the mix right for tax efficiency and to protect pension and statutory entitlements.
- Overtime and bonuses: One-off payments now tip more employees into employer NIC sooner. Forecast the employer NIC cost before you approve discretionary awards.
- Benefits in kind: Higher Class 1A NIC means company cars, healthcare and other benefits carry a bigger on-cost. Re-price packages and ensure benefits are correctly recorded for payrolling or P11D.
- Multiple jobs and category letters: Where staff have multiple employments or special categories – apprentices, under-21s, veterans, Freeport or Investment Zone roles – the wrong letter means the wrong bill. We’ll keep the letters, thresholds and reliefs straight.
- Statutory pay: Maternity, paternity, adoption and other statutory payments have set rates and recovery rules. Cashflow can be protected with the correct reclaim – but only if payroll is configured properly.
NIC threshold changes: Where outsourcing pays for itself
Handing payroll to specialists isn’t a luxury – it’s risk management and time back. Here’s how we make the 2025/26 year smoother:
- Implementation audit: We check your payroll build against the 2025/26 rulebook: thresholds, category letters, student loans, pensions, and benefits mapping.
- Director-friendly reporting: You’ll see the employer NIC cost by employee, department and benefit, so you can act early rather than react at quarter end.
- Benefits review: With Class 1A at 15 per cent, some benefits may no longer stack up. We’ll model like-for-like alternatives and the NIC impact.
- Cashflow planning: Changing thresholds alter the timing of liabilities. We project monthly PAYE/NIC and set reminders so nothing surprises your bank balance.
- Compliance guardrails: We keep you aligned to HMRC guidance, handle submissions on time, and prepare year-end forms without fuss.
If you prefer to keep some tasks in-house, we can co-source and take on the heavy lifts – the calculations, submissions and checks – while your team handles day-to-day changes.
Practical steps to take this month
- Review payroll settings: Confirm £417 monthly from April 2025. Employer rate: Confirm 15 percent for Class 1 and Class 1A/1B.
- Bonuses: Price the extra 15 percent NIC before sign-off. Benefits: Check payrolled benefits versus P11D, ensure Class 1A mapping is correct.
- Directors and family-run companies: Align salary levels to goals for pension accrual and statutory pay while keeping NIC efficient.
- Cashflow and deadlines: Lock in the submission and payment dates for PAYE/NIC. We can automate reminders and provide monthly liability forecasts.
- Category letters and starters/leavers: Check every record. Small errors multiply when thresholds tighten.
If you want us to run a quick risk check, we can review one recent payroll run and send back a short punch-list of fixes. It’s fast, low-effort, and often pays for itself within a quarter.
Why choose us for payroll outsourcing
We work nationwide, entirely online – so setup is quick, onboarding is structured, and you’ll always know what’s happening. Expect friendly service, neat reporting and responsive support. We also integrate with the tools you already use.
- Onboarding: We map your payroll and benefits. Health check: We test against the 2025/26 thresholds and rates.
- Run and reconcile RTI submissions: Filed on time, every time. Variance checks: We match movements to prior periods and flag anomalies.
- Year-end and beyond (P11D/Class 1A): Prepared and filed. Continuous updates: We apply HMRC changes as they land, and keep your records tidy.
Ready to simplify payroll before April?
The NIC threshold changes arriving on 6 April 2025 change the maths for every employer – a lower £5,000 threshold and a higher 15 percent employer rate, plus 15 percent on most benefits, means more roles attract NIC and each pay decision carries more weight. Add a busy labour market and steady pay growth, and accuracy and forecasting matter more than ever. Outsourcing payroll now is a straightforward way to protect compliance, control costs and give directors time back.
If you want payroll that runs quietly in the background, with clear numbers and fewer headaches, we’re ready to help. Book a quick chat and we’ll review your current setup, highlight savings, and have you ready for April.
