Changes to secondary Class 1 (employers’) National Insurance

As announced at Autumn Budget 2024, the government will introduce legislation to reduce the Class 1 National Insurance contributions secondary threshold, from ￡9,100 to ￡5,000 per annum. This will take effect from 6 April 2025 until 5 April 2028.

Thereafter, the secondary Class 1 National Insurance contributions threshold will be increased in line with the Consumer Price Index (CPI).

The government will introduce legislation to increase the main rate of secondary Class 1 National Insurance contributions from 13.8% to 15%. The Class 1A and Class 1B employer rates will also increase in line with this.?

The government will also introduce legislation to increase the Employment Allowance from ￡5,000 to ￡10,500 and remove the restriction that currently applies to the Employment Allowance, where only employers who have incurred a secondary Class 1 National Insurance contributions liability of less than ￡100,000 in the tax year prior are able to claim.

This will take effect from April 2025 and will mean eligible employers will be able to reduce their National Insurance contributions liabilities by up to ￡10,500 per year.?

Clarification on what an eligible employer will be under the new rules is yes to be confirmed.

These changes will be introduced by primary legislation ahead of 6 April 2025