What Employers Need to Know?
Staying compliant with the latest payroll regulations is crucial for UK employers and one of the biggest updates this tax year comes in the form of changes to National Insurance (NI) thresholds. As announced in HMRC’s April 2025 Employer Bulletin, adjustments to the Class 1 National Insurance thresholds have officially come into effect.
These changes directly impact how much both employees and employers contribute to National Insurance, affecting everything from payroll processing to employee take-home pay. Here’s what you need to know.
What Are National Insurance Thresholds?
National Insurance contributions (NICs) are mandatory payments deducted from employees’ wages and paid by employers to fund key public benefits, including the NHS, pensions, and unemployment support.
The thresholds are specific income levels that determine how much NI must be paid. For employers, it’s critical to understand these brackets because they dictate:
- When NI starts getting deducted from employee wages.
- How much the employer must contribute.
For 2025–2026, these changes apply to Class 1 contributions, which are the most relevant for standard employer-employee relationships.
What’s New in April 2025?
From 6 April 2025, the following updated thresholds apply to Class 1 NICs:
| Type of Threshold | Weekly Rate | Monthly Rate |
| Lower Earnings Limit (LEL) Employees do not pay National Insurance but get the benefits of paying | £125 | £533 |
| Primary Threshold (PT) Employees start paying National Insurance | £242 | £1,048 |
| Secondary Threshold (ST) Employers start paying National Insurance | £96 | £417 |
| Upper Earnings Limit (UEL) All employees pay a lower rate of National Insurance above this point | £967 | £4,189 |
(Source: Rates and allowances: National Insurance contributions – GOV.UK)
Key points to note:
- The Primary Threshold remains aligned with the personal allowance, meaning employees start paying NI only after earning £12,570 annually.
- The Secondary Threshold, relevant for employer contributions, remains at £9,100.
- No changes to the Upper Earnings Limit.
Implications for Employers
These updated thresholds mean:
- Payroll software must be updated immediately to calculate NICs correctly.
- Employers should review salary structures to assess potential increases or decreases in NI contributions.
- Changes may impact budgeting, especially for companies with many staff near these thresholds.
- You might see minor fluctuations in employee take-home pay due to adjusted deduction points.
If using manual systems, employers must be especially careful to input the new rates precisely. Failure to comply may result in penalties or incorrect deductions.
Compliance Tips and Best Practices
To navigate these updates efficiently:
- Use HMRC-approved payroll software or the latest version of Basic PAYE Tools, which has been updated to reflect the new thresholds.
- Regularly review the Employer Bulletin to stay on top of regulatory changes.
- Ensure your HR or payroll team is trained and aware of the latest figures.
- Double-check employee NI category letters to apply the right thresholds, especially for under-21s or apprentices.
Communicating Changes to Employees
While these updates primarily affect payroll departments, clear communication with staff is important. Employees might notice slight changes in their NI deductions.
Here’s how you can help:
- Include a brief explanation in monthly payslips or employee newsletters.
- Share a link to HMRC’s “Check your National Insurance record” tool.
- Offer to address questions via HR support channels.
Transparent communication builds trust and helps staff understand their take-home pay.
Conclusion
The 2025–26 National Insurance threshold updates are an essential consideration for UK employers. By updating payroll systems, training teams, and communicating changes effectively, you can ensure smooth compliance and avoid errors.
Stay informed by subscribing to the HMRC Employer Bulletin and consult your payroll advisor or accountant if you’re unsure how these updates impact your business.