Employer NI has gone up – Here’s how to get your business through it
Feeling like running a business is getting more expensive lately? You’re not alone. The new tax year has brought some major changes—and one of the biggest is the rise in Employer National Insurance (NI).
The rate has increased from 13.8% to 15%, and employers now start paying it on salaries over £5,000, compared to the previous, higher threshold. When you also factor in the increase in minimum wage, it’s no wonder you’re feeling the financial pressure.
This is where having the right accountant can make a real difference. At Affinity, we can help you understand these changes clearly and guide you on the best steps to manage their impact on your business.
Why does this change feel so heavy?
Almost every employer will feel this increase in some way, but some businesses will feel it more than others.
The sectors that are hit hardest include:
- Retail, hospitality, and care, where wages are lower and teams are bigger.
- Startups and small businesses, especially those just starting to grow or take on new staff.
- Companies with apprenticeship programs, though some relief still applies for apprentices under 25 earning below £50,270.
In short, you’re now being taxed on more of your employees’ earnings, which means higher NI bills—whether you’ve hired more people or not.
What does this mean for your business?
You’re paying more to employ the same team—and that can be frustrating. Even if your costs haven’t changed on the surface, the numbers behind the scenes have shifted.
This is why a quick payroll review is such a useful step. It can show you where exactly your costs have gone up, why it’s happening, and what options you have to manage it.
If you’re a limited company director, be especially careful. Lowering your salary to avoid NI might seem smart—but if your income drops below £6,500, you could lose out on qualifying years for your State Pension. That’s not a risk worth taking without solid advice.
This is where your accountant becomes more than just a number cruncher, they help you plan smartly, not just for now, but for your future too.
Small adjustments can make a big difference
Rising costs don’t always mean you need to make big cuts. Sometimes, small tweaks can ease the pressure without disrupting your business.
Here are a few options to consider:
- Switching some roles to part-time or flexible hours
- Hiring freelancers or contractors (just be mindful of IR35 rules)
- Outsourcing tasks like admin or IT to reduce payroll expenses
These won’t work for everyone, but they can create breathing room when used thoughtfully.
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Make use of salary sacrifice
One smart way to reduce your NI bill is by offering salary sacrifice schemes. These let employees give up part of their salary in return for non-cash benefits like:
- Higher pension contributions
- A cycle-to-work bike
- An electric car lease
This reduces the amount of salary that NI is charged on, so both you and your employee pay less NI. Meanwhile, your employee still gets something useful — it’s a win-win.
However, it’s important to note that the government is currently reviewing how salary sacrifice schemes work — especially around pensions.
There’s no confirmed change yet, but it’s worth keeping an eye on updates before making big decisions. You can also talk to your accountant to set things up correctly and stay compliant.
A bit of good news: Employment allowance has increased
It’s not all bad news this year. The Employment Allowance has increased to £10,500. That’s a huge help for small businesses like yours trying to manage rising costs.
And here’s the best part: the old rule that stopped bigger employers from claiming (if they paid over £100,000 in NI) is gone. So now, more businesses can apply.
You could be eligible if:
- You have at least two employees
- At least one of them earns more than £5,000
(Just note that single-director companies without any other staff still aren’t eligible.)
Support your team without paying more NI
Even in tight times, you still want to look after your people—and there are smart ways to do that without raising your NI bill.
Here are a few ideas:
- Offer tax-free benefits like bikes through the Cycle to Work scheme
- Provide childcare vouchers
- Support wellness with gym memberships or mental health tools
- Lease electric vehicles through salary sacrifice
These little things can make a big impact. They show your team that you care—and that can boost morale and retention, even if pay rises aren’t an option right now.
Look into business grants and support
You might not know this, but there are still plenty of grants and funding programmes available to UK businesses.
They’re especially useful if you’re:
- Working on sustainability or cutting carbon
- Supporting the local economy
- Innovating in fields like tech, health, or green energy
The government offers an online tool to help you find grants that match your needs. There are also region-specific offers in Scotland, Wales, and Northern Ireland. Even a small grant can make a big difference to your cash flow.
Don’t miss out on tax reliefs
Right now, every bit of saving counts. That’s why it’s worth reviewing what tax reliefs or allowances you might be missing.
Your accountant can help you explore:
- Work-from-home claims
- Mileage and business travel
- Equipment purchases through the Annual Investment Allowance
- Business rates relief
- Charitable donations
These smaller claims might not seem like much on their own—but together, they add up and could give your business a much-needed financial boost.
How an accounting expert can help you?
There’s a lot on your plate. And now with NI changes and rising costs, it can feel like one more thing pulling at your time, energy, and budget.
But you don’t have to shoulder it all by yourself.
A good accountant doesn’t just manage your books—they listen, explain, and help you make confident, informed choices. They’re the calm voice that helps you step back, see the bigger picture, and take the right next step.
Conclusion
The rise in Employer NI is yet another challenge but you don’t have to face it alone. With the right support, you can adapt, protect your team, and keep moving forward. Smart strategies, helpful allowances, and small changes can ease the pressure—without risking what you’ve worked so hard to build.
Don’t wait until it feels overwhelming. Get in touch and let us help you understand what’s changed and what your best options are.
We’re in this together.
Author
Mukund Amin
Co-Founder & Director
Mukund is a founding member of the Affinity Associates Group and has been with the practice for nearly 40 years. After completing his degree in Accounting and Finance, he went on to qualify with both ACCA and ICAEW in 1991. Over the years, he’s built deep expertise in consultancy, tax, business development, and corporate group structures. Mukund is known for helping clients make sense of complex financial challenges and turning them into opportunities for sustainable growth.
