Employer National Insurance Receipts Surge: What the £143.9bn Record Means for UK Businesses

Employer National Insurance Receipts Surge: What the £143.9bn Record Means for UK Businesses

Higher rates and a lower threshold have driven a sharp increase in employer NIC receipts—putting payroll costs, recruitment decisions and business planning firmly in the spotlight.

Employer National Insurance contributions (NICs) have risen sharply following the changes introduced in April 2025. Provisional HMRC figures show PAYE Class 1 employer NIC receipts reaching £143.9 billion in 2025–26, compared with £108.5 billion in 2023–24.

The increase reflects both wider economic factors, including wage growth, and a major policy shift: the employer NIC rate rose from 13.8% to 15%, while the annual secondary threshold fell from £9,100 to £5,000. Together, these changes mean contributions apply at a higher rate and across a larger share of employees’ earnings.

A bigger-than-expected increase

On the figures available, employer NIC receipts were around £28 billion higher than in 2023–24. That is greater than the £24 billion of additional revenue originally anticipated from the policy changes, although not all of the increase can be attributed to the new rate and threshold.

For businesses, the headline is clear: employment has become more expensive. The impact is particularly pronounced in labour-intensive sectors and for employers with significant numbers of part-time or lower-paid staff, because the reduced threshold brings more earnings within the charge.

Why it matters for employers

Higher employer NICs affect more than the payroll line. They can influence recruitment, pay reviews, pricing and investment decisions. Some organisations may also need to revisit workforce structures, benefits and productivity plans to keep total employment costs sustainable.

Eligible employers should also check that they are making full use of the Employment Allowance, which increased to £10,500 from April 2025. The allowance can soften the impact, but its value will vary according to an organisation’s size, structure and eligibility.

Further employment costs are arriving

The NIC rise is not occurring in isolation. From April 2026, reforms to Statutory Sick Pay introduced day-one entitlement, removed the lower earnings threshold and linked payments for lower earners to earnings. These changes will create additional payroll and administrative costs, making forward planning increasingly important.

Practical steps businesses can take now

• Review workforce budgets: model the full cost of planned hires, pay rises and overtime.
• Confirm reliefs and allowances: check eligibility for the Employment Allowance and any category-specific NIC reliefs.
• Update payroll and absence processes: ensure systems reflect current NIC and Statutory Sick Pay rules.
• Strengthen workforce planning: consider retention, training, automation and productivity alongside recruitment.
• Protect margins: reflect higher employment costs in pricing, forecasts and client contracts where appropriate.

The outlook

Employer NIC receipts underline how significantly the cost of employment has shifted. With further regulatory changes taking effect and economic uncertainty continuing, businesses will need clear forecasts and a joined-up approach to payroll, people and growth. The priority now is not simply to absorb higher costs, but to plan for them strategically.