Changes to Employers National Insurance
In the October 2024 budget, the government announced significant changes to employers National Insurance Contributions (NICs) that will come into effect in April 2025:
Increase in NIC rate: The rate of employers NIC will increase from 13.8% to 15%
Lowered threshold: The threshold at which employers start paying NICs will be reduced from £9,100 to £5,000 per tax year
Employment allowance increase: the employment allowance has increased from £5,000 to £10,500. Previously only employers with an NIC bill of less than £100,000 were eligible, however now all employers are eligible. This is effectively a discount on your NIC bill.
Impact on Parishes
The impact on parishes will largely depend on the number of employees employed by the parish and their annual salary. Despite the increased NIC rate and lowered threshold meaning that the NIC cost per employee will be higher, the increased employment allowance may mean that parishes pay less NIC than before the changes.
Example – current rules
One full-time (35 hours) employee paid current minimum wage (£11.44 per hour) = £20,821 annual salary.
£20,821 - £9,100 (NIC threshold) = £11,721
£11,721 x 13.8% = £1,617 NIC liability
If a parish employed four employees on the above rate, the total NIC liability would be (£1,617 x 4) - £5,000 = £1,468 total NIC liability
Example – new rules from April 2025
One full-time (35 hours) employee paid at new minimum wage (£12.21 per hour) = £22,222 annual salary.
£22,222 - £5,000 (new NIC threshold) = £17,222
£17,222 x 15% = £2,583 NIC liability
If a parish employed four employees on the above rate, the total NIC liability would be (£2,583 x 4) - £10,500 = £0 total NIC liability