What Is Employer National Insurance? (UK 2025/26)

Employer National Insurance is a payroll tax paid by UK businesses on top of each employee's salary. It does not come out of the employee's pay — it is an additional cost borne entirely by the employer, though economists widely agree it ultimately affects wages and hiring decisions.

2025/26 Rates

From April 2025, employers pay NICs at 15% on all employee earnings above the secondary threshold, which was reduced to £96 per week (approximately £5,000 per year). This represents a significant increase from the previous rate of 13.8% with a threshold of £175 per week, announced at the October 2024 Budget.

Employment Allowance

Eligible employers can claim the Employment Allowance to offset their NIC liability. For 2025/26 this is £10,500, increased from £5,000. Employers and connected companies with a total pay bill exceeding £3 million are not eligible. The expanded allowance was designed to protect smaller businesses from the NIC increase.

How Salary Sacrifice Helps

When an employee enters a salary sacrifice arrangement for pensions, their contractual salary is reduced. Because employer NICs are calculated on the reduced salary, the employer saves 15% on the amount sacrificed. Many employers pass some of this saving back to employees as additional pension contributions.