The big employer National Insurance changes took effect in April 2025, and they continue to apply in 2026/27. The November 2025 Budget then extended the freeze on the employer threshold to April 2031 and announced a new limit on pension salary sacrifice from 2029. Here is where things stand and what employers should be doing.
Employer NI in 2026/27 at a Glance
| Item | 2024/25 | 2026/27 |
|---|---|---|
| Employer Class 1 rate | 13.8% | 15% |
| Secondary threshold | £9,100 a year (£175 a week) | £5,000 a year (£96 a week) |
| Employment Allowance | £5,000 | £10,500 |
The 15% rate and £5,000 threshold
Employers pay 15% NI on each employee's earnings above £5,000 a year. Because the threshold is so much lower than before, NI now applies to a much larger slice of every salary. For an employee on £30,000, employer NI is 15% of £25,000 — £3,750 a year — compared with £2,884 under the 2024/25 rules, an increase of around £866.
The threshold was originally due to stay at £5,000 until April 2028. The November 2025 Budget extended that freeze, along with the main income tax and NI thresholds, until April 2031. As wages rise, the employer NI bill on each employee will keep creeping up.
The £10,500 Employment Allowance
The Employment Allowance lets eligible employers reduce their employer NI bill by up to £10,500 a year. Since April 2025, the old rule that excluded employers with an employer NI bill of £100,000 or more has gone, so larger employers can now claim too.
Some restrictions remain. In particular, a limited company whose only employee paid above the secondary threshold is a director cannot claim, and most public bodies are excluded. The allowance is not automatic — you claim it through your payroll software each tax year.
Coming in 2029: Salary Sacrifice Limit
Pension salary sacrifice is a common way to reduce NI for both employer and employee. From 6 April 2029, sacrificed pension contributions above £2,000 a year per employee will be subject to employer and employee NI. Amounts up to £2,000 are unaffected. There is time to plan, but if you offer generous salary sacrifice schemes it is worth modelling the cost now.
Who Feels It Most?
- Employers of part-time and lower-paid staff — the £5,000 threshold means employer NI applies to staff who previously attracted none.
- Labour-intensive sectors — hospitality, retail, care and cleaning, where wages are most of the cost base.
- Single-director companies — they cannot use the Employment Allowance, which affects how directors set their salary.
What to Do Now
- Check you are claiming the Employment Allowance for 2026/27 if you are eligible.
- Budget for the frozen threshold — factor rising employer NI into pay reviews and hiring plans.
- Review director pay — the best salary-and-dividend mix has shifted, and the ordinary and upper dividend tax rates rose by two percentage points from April 2026. A review through our tax planning service can help.
- Look at salary sacrifice now — it still saves NI in full until 2029, and new schemes can be designed with the £2,000 limit in mind.
- Watch the Budget — the 28 October 2026 Budget kept employer NI at 15% and left the thresholds frozen until April 2031, so the figures in this guide still apply.
Need help with payroll costs?
We can model your employer NI, check your Employment Allowance claim and run payroll alongside your bookkeeping. Get in touch for a free consultation.