The National Insurance increases for employers are now in full swing for the 2025 tax year, which may be unsettling if your tax liabilities have suddenly jumped… but you may not know of some of the other changes this year that can help you save money!
For the smaller employers, you may qualify for Small Employers’ Relief on any of the below statutory payments made to employees:
Statutory Maternity Pay (SMP)
Statutory Paternity Pay (SPP)
Statutory Adoption Pay (SAP)
Statutory Parental Bereavement Pay (SPBP)
Statutory Neonatal Care Pay
Statutory Shared Parental Pay
Where your Class 1 National Insurance liability (both employee and employer contributions, otherwise known as “primary” and “secondary” contributions) for the tax year immediately preceding the type of leave taking place is £45,000 or less (ignoring any reductions by Employment Allowance, more below…), you’ll be able to reclaim 108.5% of the payment made rather than the usual 92%.
Your software should calculate this on your behalf, and these’ll be reported in an EPS to HMRC, and you’ll end up with a credit on your account to offset future payments to HMRC. This can be really handy and can help offset any costs you may have incurred by getting this type of leave covered!
The rules for Employment Allowance have also changed. The Class 1 National Insurance threshold of £100,000 has been removed, meaning that most businesses can now take advantage of this (unless you’re lucky enough to be in a group of companies – then only one company in the group can claim this! There are also rules about “connected” companies, and if you’re unsure what that might mean for you, seek advice!). There are a few specific exemptions, so as with the “connected” companies’ rules, it’s best to ask your payroll provider.
The amount you can claim has increased too, up to £10,500; this means that for very small employers where your Class 1 National Insurance costs were up to £10,500 for the year and you claim the allowance, you won’t have to pay a penny! If your payroll has already been run for April, don’t panic! You can sort this in your next pay period and the allowance will apply for the year.
If this is all news to you, and you’ve been operating for a little while – don’t fret! You can backdate claims for Employment Allowance for the previous 4 tax years, but the £100,000 threshold previously mentioned will apply, and the amount of allowance you’ll get for each year will be slightly less.
Both changes should be utilised where applicable to take as much of the squeeze out of the NI changes and give your business a chance to keep doing what you do best!
Why dedicate your time and energy to the complexities and changes of payroll legislation when a reliable solution is ready to support you? Contact Southern Payroll Solutions to see how we can help!
Directors of a Hampshire based payroll bureau offering managed payroll services and ad-hoc consultancy. Niall and Rebecca have nearly two decades of payroll experience to draw upon, and are keen to…
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