Employer National Insurance 2026-27: The April 2025 Changes Explained

What changed in April 2025

Two significant changes to employer National Insurance came into effect on 6 April 2025:

1. Rate increase: Employer NI rose from 13.8% to 15%
2. Threshold reduction: The Secondary Threshold (where employer NI starts) dropped from £9,100 to £5,000 per year

For a director on a £12,570 salary, employer NI is now: (£12,570 − £5,000) × 15% = £1,135.50 per year. Under the old rules, it was (£12,570 − £9,100) × 13.8% = £479.46. The cost has more than doubled.

Impact on the optimal director salary

The increased employer NI makes lower salary levels relatively more attractive than before. However, the CT deduction on salary (including employer NI) still typically makes £12,570 the optimal salary for directors who cannot claim Employment Allowance. The numbers still work — but only just.

Employment Allowance and the threshold change

The Employment Allowance also increased to £10,500 from April 2025. This offsets employer NI for companies with eligible employees. Sole director companies (where the director is the only person paid) cannot claim Employment Allowance — they are specifically excluded. But companies with at least one other employee can claim it, making the salary strategy even more efficient.

Modelling your position

Use the Salary vs Dividend calculator to see the exact impact of different salary levels on your combined tax position. The optimal salary point shifted slightly with the April 2025 changes, and the right answer depends on your profit level and whether you have other employees.