Employer National Insurance rates 2025/26: what you pay and what changed

The headline numbers

For the 2025/26 tax year, employer Class 1 National Insurance is charged at 15% on each employee's earnings above the secondary threshold, and that secondary threshold has been cut to £5,000 a year — roughly £96 a week or £417 a month — down sharply from £9,100 the year before. HMRC's guidance on rates and thresholds for employers confirms both figures directly. To offset the impact, the Employment Allowance rose to up to £10,500 per year for eligible employers, and the previous rule that shut out businesses with an NIC bill over £100,000 has been scrapped, so far more employers — including mid-sized ones that used to be excluded — can now claim it. Put together, these three numbers are the whole story of employer NIC in 2025/26: a higher rate, a lower threshold that pulls more pay into scope, and a much larger allowance available to claw a chunk of it straight back.

• Rate: 15% on each employee's earnings above the secondary threshold.
• Secondary threshold: £5,000 per year (about £96 per week) — down from £9,100.
• Employment Allowance: up to £10,500 per year off the total bill for eligible employers, with the old £100,000 eligibility cap removed.

What the change means in practice

The lower threshold is the change that actually moves the needle for most businesses, because it means employer NIC now bites on far more of every wage packet than it did before. Under the old £9,100 threshold, a chunk of an employee's earnings sat below the line and cost the employer nothing in NIC; under the new £5,000 threshold, roughly £4,100 more of each employee's annual pay is now exposed to the 15% rate. For an employer with a team of ten or twenty people, that shift alone can add thousands of pounds a year to the payroll bill, even before the higher 15% rate (up from 13.8%) is factored in. This is exactly why the reliefs available in 2025/26 matter more than they used to: an employer who does nothing beyond running default payroll settings pays the full 15% on nearly every wage above £5,000, while an employer who claims the Employment Allowance and has every employee on the correct NI category letter can end up paying dramatically less for the same headcount. The gap between the two isn't marginal — it's often the difference between a manageable payroll cost and one that quietly erodes margin all year.

Category letters that reduce the rate to 0%

Not every employee costs an employer the full 15% — for certain groups, employer NIC drops to 0% up to an upper earnings threshold, but only if the employee is recorded against the correct National Insurance category letter on the payroll system. HMRC's rates-and-thresholds guidance sets out four groups that qualify: employees under 21 (category M), apprentices under 25 (category H), veterans in their first year of civilian employment after leaving the armed forces (category V), and employees working at designated Freeport or Investment Zone sites, who sit under their own special category letters. In each case the relief isn't automatic — it depends entirely on the employer (or their payroll provider) actively selecting the right letter for that employee rather than defaulting to the standard category A. Above the relevant upper threshold, the rate reverts to the standard 15% like everyone else, so the saving applies specifically to earnings within that band. For a business hiring apprentices, graduates, or ex-forces staff, getting this right on day one of employment — rather than catching it in a year-end review — is one of the simplest ways to keep the NIC bill lower without changing a single thing about how the business operates.

• Under-21s (category M).
• Apprentices under 25 (category H).
• Veterans in their first year of civilian employment (category V).
• Employees at Freeport and Investment Zone sites (special categories).

A worked example: what a small team actually costs in 2025/26

Numbers make this concrete faster than percentages do, so here's a realistic scenario using the confirmed 2025/26 figures. Take a small business with five employees, each earning £30,000 a year, none of them on a special category letter (all category A). For each employee, employer NIC is due at 15% on earnings above the £5,000 secondary threshold — so on £25,000 of NIC-able earnings per employee (£30,000 minus £5,000), the charge is £3,750 per employee per year. Across five employees, that's a gross employer NIC bill of £18,750 before any relief. Now apply the Employment Allowance: an eligible employer can deduct up to £10,500 from that total, bringing the actual bill down to £8,250 for the year — a reduction of more than half. Compare that to an employer who either doesn't know they can claim the allowance or hasn't applied for it: they pay the full £18,750, more than double what they needed to for identical staff on identical pay. The only difference between the two outcomes is one form, filed correctly, which is precisely the kind of gap a payroll review is designed to catch before it costs a business another year's worth of unclaimed relief.

Common mistakes that inflate the NIC bill

Most employers who overpay National Insurance aren't doing anything dramatically wrong — they're making small, avoidable errors that compound across every payroll run of the year. The most frequent is simply not claiming the Employment Allowance at all: because it has to be actively switched on through payroll software or HMRC's online service each tax year, businesses that set it up once and assume it carries over automatically, or that never set it up in the first place, leave up to £10,500 on the table annually. The second most common mistake is leaving employees on the default category A when they actually qualify for a 0% category — apprentices under 25 and staff under 21 are the two groups most often missed, usually because nobody flagged the qualifying status to payroll at the point of hiring. Beyond these two, employers regularly miscalculate NIC on irregular payments like bonuses or backdated pay rises by applying the wrong period-based threshold, and some smaller businesses wrongly assume they're ineligible for the Employment Allowance because of old rules — such as the £100,000 liability cap — that no longer apply from April 2025 onwards.

• Not claiming the Employment Allowance, or forgetting to re-activate it at the start of a new tax year.
• Leaving qualifying apprentices or under-21s on the standard category A instead of H or M.
• Applying the wrong secondary threshold when calculating NIC on bonuses, backdated pay, or irregular payments.
• Assuming the business is still excluded from the Employment Allowance under the old £100,000 NIC-bill cap, which was removed from April 2025.
• Treating the Employment Allowance as a per-employee benefit rather than a single annual deduction from the whole employer NIC bill.

Edge cases worth checking

Two situations catch out even reasonably well-run payrolls and are worth checking specifically rather than assuming they're covered by default settings. The first is connected companies: the Employment Allowance is capped at £10,500 per group of connected employers, not £10,500 per company, so a business owner running two or three related limited companies through the same payroll can't claim the allowance multiple times — only one company in the group can claim it in a given tax year, and choosing which one usually depends on which has the higher NIC bill to offset. The second is mid-year category changes: an apprentice who turns 25, or an under-21 employee who has a birthday, moves off their 0% category letter partway through the year, and payroll software needs to be updated on the correct date rather than at the next routine review, otherwise the employer either underpays NIC (creating an HMRC correction later) or overpays it needlessly for months after the employee should have moved to category A. Both edge cases are easy to miss precisely because they don't show up as an error on a single payslip — they only become visible when someone checks the bigger picture.

Getting the number down, legally

Between the Employment Allowance, category letter corrections, statutory pay reclaims and pension structuring, the gap between a payroll run on defaults and a payroll run properly optimised is substantial — often running into thousands of pounds a year for a business with even a modest headcount, as the worked example above shows. None of these levers involve anything aggressive or grey-area: they're reliefs and correct classifications that HMRC has built into the system on purpose, and the businesses using them fully are simply the ones that have checked, while the businesses paying the full 15% on everything are usually the ones that haven't. The catch is that most of these savings don't appear automatically — the Employment Allowance has to be claimed, category letters have to be set correctly and kept current, and statutory payments have to be reclaimed through the right process rather than absorbed as a cost. A free payroll review prices that gap for your business specifically — using your real headcount, real pay, and real category letters — before you commit to anything, so you know exactly what correctly run payroll is worth to you rather than guessing from a general guide like this one.

What is the employer National Insurance rate for 2025/26?

15% on earnings above the secondary threshold of £5,000 per year, confirmed on HMRC's rates and thresholds for employers page. Employees don't pay this — it's a cost on the employer, calculated separately from the employee's own National Insurance deducted through payroll.

How much is the Employment Allowance in 2025/26?

Up to £10,500 per tax year for eligible employers, and the previous £100,000 NIC-bill eligibility cap has been removed from April 2025 — so far more businesses qualify than before, including many mid-sized employers who were previously excluded. It has to be claimed each tax year rather than applying automatically.

Do employers pay National Insurance for apprentices and under-21s?

Not up to an upper earnings threshold — provided the employee is on the correct NI category letter (H for apprentices under 25, M for under-21s). Wrong letters are one of the most common payroll errors, and the relief stops applying once the employee ages out of the qualifying category, so it needs checking at each birthday, not just when they're hired.

Can a business claim the Employment Allowance more than once if it runs several companies?

No. The £10,500 allowance applies per group of connected employers, not per company, so only one business within a connected group can claim it in a given tax year — it isn't multiplied by the number of companies under common ownership.