Employers' National Insurance Explained
A practical guide to what Employers' NI is, when you have to pay it, and how Employment Allowance could save your business thousands every year.
What Is Employers' National Insurance?
Employers' National Insurance (often called Employers' NI or secondary Class 1 NICs) is a tax that employers pay on top of each employee's wages. It doesn't come out of the employee's pay — it's an additional cost the business bears.
Think of it as the price of employing someone. Every time you pay a member of staff above a certain threshold, HMRC expects you to contribute Employers' NI alongside the PAYE income tax and employees' NI you already deduct from their wages.
2025/26 Employers' NI at a Glance
Rate
15%
on earnings above the Secondary Threshold
Secondary Threshold
£5,000 / year
£96.15 per week / £417 per month
When Do You Pay Employers' NI?
You pay Employers' NI every time you run payroll and an employee earns above the Secondary Threshold. The amount is calculated automatically by your payroll software and included in your PAYE payment to HMRC.
You register as an employer with HMRC and set up PAYE
Each pay run, your software calculates Employers' NI on earnings above £5,000/year
The NI is reported to HMRC via your Full Payment Submission (FPS)
You pay the total PAYE bill (income tax + employees' NI + employers' NI) to HMRC by the 22nd of the following month (or 19th if paying by post)
Quick Example
An employee earns £12,570 a year. Employers' NI is 15% on earnings above the £5,000 threshold — so 15% × £7,570 = £1,135.50 per year in Employers' NI for that one employee. That's on top of their salary.
Who Has to Pay It?
Any business or organisation that employs staff and pays them above the Secondary Threshold must pay Employers' NI. This includes:
Limited companies paying directors and employees
Sole traders with employees on payroll
Partnerships employing staff
Charities and not-for-profits with paid workers
If you're a sole trader with no employees, or a limited company director taking only dividends (no salary), you won't have an Employers' NI liability.
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Employment Allowance — Reducing Your Bill
Employment Allowance is a government relief that lets eligible employers reduce their Employers' NI bill by up to £10,500 per tax year. It's applied against your monthly PAYE payments until it's used up — meaning for many small businesses, it wipes out the Employers' NI bill entirely for much of the year.
Do You Qualify?
Most small and medium employers qualify. You're eligible if:
Your Employers' NI bill was less than £100,000 in the previous tax year
You have at least one employee (not just a sole director) earning above the Secondary Threshold
You're not a public body, company undertaking more than half its work in the public sector, or a service company working for one client through IR35 legislation
Who Doesn't Qualify?
Companies where the only employee paid above the threshold is a sole director
Employers with a Class 1 NI bill of £100,000 or more in the previous tax year
Public authorities and bodies (e.g. local councils, NHS trusts)
Businesses carrying out more than half their work in the public sector (de minimis state aid rules)
We Claim It Automatically
If you're an In Front Accounting payroll client, you don't need to worry about claiming Employment Allowance yourself. At the start of each tax year, we review your eligibility and — if you qualify — we apply the allowance to your account automatically.
No forms, no chasing HMRC
We handle the claim through your payroll software as part of your regular PAYE submissions. You'll see the allowance reduce your monthly PAYE bill until the full £10,500 is used. If your circumstances change mid-year, we'll update things accordingly.
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Common Questions
What is the current Employers' NI rate?
From 6 April 2025, employers pay Class 1 NICs at 15% on earnings above the Secondary Threshold (currently £5,000 per year). The rate was increased from 13.8% as part of the Autumn Budget 2024.
Do I pay Employers' NI on pension contributions?
No — employer pension contributions are not subject to Employers' National Insurance. This is one reason salary sacrifice arrangements can be tax-efficient for both employer and employee.
Is Employers' NI the same as employees' NI?
No. Employees pay their own NI (Class 1 primary) which is deducted from their wages. Employers' NI (Class 1 secondary) is an additional cost paid by the employer on top of the employee's gross salary.
Do I need to claim Employment Allowance every year?
If you're an In Front Accounting payroll client, no — we claim it automatically at the start of each tax year if you qualify. If you manage your own payroll, you'll need to re-confirm your eligibility each April.
Can I get Employment Allowance if I'm a sole director with no other employees?
No. HMRC specifically excludes companies where the only employee paid above the Secondary Threshold is a sole director. You need at least one other employee on your payroll to qualify.
Need Help With Payroll or Employers' NI?
Whether you're setting up PAYE for the first time or want to make sure you're claiming every relief available, our team is here to help.