Employer NI Rises to 15% from April 2025: What It Means for Jobs, Wages, and Take-Home Pay
From April 2025, the cost of employing someone in the UK increases materially. The employer NI rate rises from 13.8% to 15%, and the threshold above which it is charged falls from £9,100 to £5,000 of annual earnings. For a full-time worker on minimum wage earning around £22,000, the employer's NI liability rises from roughly £1,779 to around £2,550 per year — a £771 increase simply to maintain the same workforce.
The change was announced in the October 2024 Autumn Budget and is the biggest single revenue-raising measure in that Budget, expected to generate around £25 billion per year. The Employment Allowance was simultaneously doubled to £10,500 to protect smaller employers, but for any business employing more than a handful of workers, the net impact is still significantly negative.
The mechanics of the change
Under the 2024-25 system, employers paid NICs at 13.8% on each employee's earnings above £9,100 per year. From April 2025:
- Rate: 13.8% → 15%
- Secondary threshold: £9,100 → £5,000
- Employment Allowance: £5,000 → £10,500 (available to employers with secondary NI bills under £100,000)
For a business with 20 employees each earning £30,000, the additional employer NI cost is roughly £17,380 per year — a meaningful sum for a mid-size small business. For a large employer with thousands of staff, the additional cost runs into millions.
Who actually bears the cost?
Economists broadly agree that employer-side labour taxes are ultimately borne by workers through lower wages, rather than by shareholders through lower profits. The transmission mechanism is straightforward: if the cost of employing someone rises, employers have three options — accept lower margins, raise prices, or pay workers less (either by freezing wages below what they would otherwise have risen, reducing hours, or reducing headcount). In practice, some combination of all three occurs, depending on market conditions.
The Bank of England and OBR both forecast that the employer NI rise would put downward pressure on wage growth in 2025-26, partially offsetting the NLW increase to £12.21 and the 8% employee NI rate workers enjoy. For workers not covered by collective bargaining or NLW floors, wage growth restraint is the most likely outcome.
Sectors most affected
The change hits hardest in labour-intensive sectors with large numbers of lower-paid workers — retail, hospitality, social care, and cleaning and maintenance services. These sectors already operate on thin margins and have limited ability to absorb higher labour costs without raising prices. The NHS and public sector are also significantly affected, though the government funds public sector employers — meaning the cost effectively transfers back to the Treasury.
Conclusion
The April 2025 employer NI rise is the most consequential change in the Budget for working people who will not directly see it on their payslip. Wage growth in 2025-26 is expected to be lower than it would otherwise have been — meaning the real-terms value of NLW and NI improvements is partly eroded. Use our calculator to see your full take-home pay picture at 2025-26 rates.