UK Employer National Insurance Rate to Rise to 15% from April 2025, Secondary Threshold Halved to £5,000

London, UK – Employers in the United Kingdom face significant increases in National Insurance Contributions (NICs) from April 2025, with the main rate for employers set to climb from 13.8% to 15%. This change, announced in the Autumn Budget, also includes a reduction in the secondary threshold, the point at which employers begin paying NICs, from £9,100 to £5,000 annually per employee. The measures are projected to raise substantial revenue for public finances.

The government has also adjusted the Employment Allowance, increasing it from £5,000 to £10,500 and removing the £100,000 eligibility cap, aiming to mitigate the impact on smaller businesses. Despite this, around 940,000 employers are expected to see an increase in their NICs liability, while approximately 250,000 may see a decrease, and 820,000 will experience no change. The Institute for Fiscal Studies estimates that employers will pay an additional £900 for each employee on median average earnings.

The changes have drawn criticism regarding their potential impact on the private sector and the broader economy. Commenting on the policy, James Clark stated in a tweet, > "This following on from increases in employer NI that only affects the private sector and many other policies. Labour is creating a two tier society where a productive private sector subsidises an unproductive public sector." This sentiment reflects concerns that the burden of increased costs falls disproportionately on private enterprises.

The Labour Party, currently in opposition, has outlined an economic strategy that emphasizes leveraging private investment for public services. Initiatives such as the National Wealth Fund and GB Energy aim to attract private capital, with a target of securing £3 of private investment for every £1 of public investment. This approach, which includes public-private partnerships (PPPs), seeks to fund infrastructure and green energy projects without solely relying on tax increases or austerity.

However, the reliance on private finance for public services has sparked debate, with some critics drawing parallels to past Private Finance Initiatives (PFIs) and questioning the long-term value for money. Experts suggest that while PPPs can finance large-scale projects, their success often depends on clear contracts and robust governance to avoid cost overruns and renegotiations. The Labour Party maintains that its fiscal rules and strategic use of public investment will ensure economic stability and growth.