What do record National Insurance Contributions mean for businesses?
When a year ends, it is natural for many to look back on the time that has passed and reflect on what was achieved.
Whether this is sharing Spotify Wrapped playlists or rankings of the best films of the year, this introspection can help us understand more about ourselves and the world in which we live.
Fortunately, HMRC is similarly reflective and we can see how the current tax year has gone so far.
Unsurprisingly, employer National Insurance Contributions (NICs) have hit record highs while other taxes are down.
With little relief in sight, what can businesses do to manage these growing bills?
Why are employer NICs so high?
Business owners have been feeling the pressure of increasing employer NICs and the data highlights how difficult the situation is becoming.
Employer NICs are up by almost a quarter, as the total collected from April to November 2025 was £93.7 billion, up from £75.9 billion the previous year.
The 23 per cent increase is emblematic of the impact of the previous Autumn Budget and may serve to vindicate critics of the increase who feel it was too much too soon.
The increase can be attributed to the double impact of changing rates coupled with increasing wages.
The rate of employer NICs rose from 13.8 per cent to 15 per cent from April 2025 and allowances for lower-paid workers were halved.
It is expected that, by the end of the tax year, the total takings from employer NICs will be a record amount, far surpassing the previous record of £116 billion collected in the 2024-25 tax year.
Will employer NICs continue to increase?
While the NIC rates were not changed in the 2025 Autumn Budget, that does not mean the NIC bill will come down any time soon.
The sharp rise in National Minimum Wage and National Living Wage, both of which will likely push up other wages, will all serve to increase the overall employer NIC bill.
There are growing concerns that the unemployment rate may increase and the job market shrink further if employers find themselves unable to keep pace with rising costs.
Can anything be done to keep the NIC bill low?
For now, salary sacrifice remains an effective way to reward workers without bearing the brunt of additional NIC costs.
However, this too will be impacted in 2027.
From April 2027, a £2,000 threshold will be placed on salary sacrifice, with any amount over that becoming subject to tax and NICs.
This means that even if you can effectively plan around NICs this coming year, the 2027 tax year will likely see a further hike in employer NICs.
Ultimately, careful financial planning with expert advice may be the only way to manage the ever-increasing challenge of employer NICs.
Our team can help you review your finances so you can become more financially resilient in the upcoming tax year.
Speak to our team today to help plan for the next tax year.
