Employer National Insurance contributions
A clear UK guide to employer National Insurance, secondary thresholds and the Employment Allowance.
Employer National Insurance contributions are the often-overlooked second payroll tax that adds 13.8% to almost every salary above the secondary threshold. For a small business hiring its first employees, employer NIC can quickly become the biggest line in payroll outside gross wages, which is why the Employment Allowance matters so much.
How employer NIC works
Employers pay secondary Class 1 NIC on each employee’s earnings above a weekly or annual secondary threshold. The rate has been 13.8% for many years (subject to confirmation in each year’s Finance Act).
| Item | 2024-25 |
|---|---|
| Secondary threshold (annual) | £9,100 |
| Secondary rate | 13.8% |
| Employment Allowance | Up to £5,000 per organisation |
| Class 1A on benefits in kind | 13.8% (annual via P11D(b)) |
| Apprenticeship Levy threshold | £3m payroll |
The employee separately pays primary Class 1 (currently 8% above the primary threshold) — see our PAYE Real Time Information guide.
Reduced rates for specific groups
Employer NIC is reduced to 0% up to a higher upper threshold for some categories of worker, designed to encourage hiring.
| Category | Threshold | Effective rate up to threshold |
|---|---|---|
| Apprentices under 25 | £50,270 | 0% |
| Employees under 21 | £50,270 | 0% |
| Veterans (first 12 months) | £50,270 | 0% |
| Freeport / Investment Zone employees | £25,000 | 0% |
| Standard employee | £9,100 | 0% then 13.8% |
These savings can shape recruitment decisions, especially for fast-growing SMEs.
Employment Allowance in practice
A qualifying employer claims up to £5,000 a year off its employer NIC bill. To qualify the employer must have at least one employee earning above the secondary threshold and total employer NIC of less than £100,000 in the previous tax year. Single-director companies with no other employees do not qualify.
- Tick the Employment Allowance box in your payroll software EPS
- Track the running balance — claim stops at £5,000 in-year
- Carry no unused balance forward; the allowance resets each tax year
- Connected employers share one £5,000 allowance between them
- Re-claim each tax year; it is not automatic
- Confirm de minimis state aid rules where relevant
Planning the bill
Build employer NIC into salary modelling from day one. Pair this with our pension auto-enrolment guide, the PAYE RTI article, and our year-end checklist to keep pay-day surprises off the table. Verify current rates on the HMRC National Insurance rates page . See pricing for payroll that calculates employer NIC and Employment Allowance automatically.