Big Changes to Employer’s NI and National Minimum Wage in 2025/26: Here’s Your Guide

The upcoming 2025/26 tax year brings several important changes—both to Employer’s National Insurance (NI) and to the National Minimum Wage (NMW). These adjustments could significantly affect your overall payroll costs and hiring strategies. At Be Payroll, our goal is to help you stay informed and prepared for any new requirements and opportunities.

What’s Changing?

  1. Employer’s NI Adjustments
  • Increased NI Rate
    Employer’s NI is rising from 13.8% to 15% on earnings above the designated threshold.
  • Lower Earnings Threshold
    Contributions will now be required on earnings over £5,000 (reduced from £9,100).
  • Enhanced NI Allowance
    The Employer’s NI Allowance is moving up from £5,000 to £10,500, potentially offsetting costs for many smaller businesses.
  1. National Minimum Wage Updates

In addition to NI changes, the National Minimum Wage rates are also increasing. Below is a summary of the old vs. new rates, alongside their approximate percentage change:

Category New Rate
(from 01/04/2025)		 Current Rate
(from 01/04/2024)		 % Change
National Living Wage (21+) £12.21 £11.44 +6.7%
18–20 Year Old Rate £10.00 £8.60 +16.3%
16–17 Year Old Rate £7.55 £6.40 +18%
Apprentice Rate £7.55 £6.40 +18%

Note: These figures are illustrative and based on current projections; exact rates may be confirmed closer to the start of the tax year.

Who Could Feel the Impact?

  • Employers with Lower-Salary Staff:
    With a lower NI threshold and higher minimum wage rates, more employees may now fall above the new thresholds—leading to increased contributions and wage costs.
  • Organizations with Higher Salaries:
    A higher NI rate means bigger NI costs for those earning above the threshold.
  • Small Businesses:
    Although NI expenses might rise, the improved Employer’s NI Allowance could offset some of the cost. Meanwhile, minimum wage increases can affect overall staffing expenses, but they help maintain competitive pay rates.
  • Growing Companies:
    Hiring strategies may need to be adjusted to account for both revised NI structures and the rising minimum wage.

How Should You Prepare?

  1. Reassess Your Budget:
    Review projected labour costs in light of both the new NI rates/thresholds and the higher NMW rates.
  2. Consider Your Workforce:
    Determine if the changes will influence hiring plans or require adjustments to existing workforce structures or pay scales.
  3. Explore the NI Allowance:
    Evaluate how the increased Employer’s NI Allowance might support your business and potentially offset added payroll expenses.
  4. Stay Compliant with NMW:
    Ensure your documents and processes are updated to reflect the new minimum wage levels so that you remain fully compliant.

At Be Payroll, we are here to simplify these updates so you can focus on running your business smoothly. If you have any questions about the impact of the new Employer’s NI rules or the National Minimum Wage increases—or need tailored support—our team is just a call or email away.

Stay ahead of the changes with Be Payroll—together, we’ll keep your payroll on track.