In the 2024 Autumn Budget, the Chancellor Rachel Reeves announced changes to National Insurance rates paid by employers. These came into effect on 6th April 2025 at the start of the new 2025/26 tax year.
The government introduced the changes with the aim of raising revenue for public finances. Employees themselves do not face any increase in the National Insurance rates they pay.
In this blog, we outline some of the key National Insurance changes. And we look at how better working-time management can help with payroll calculations.
Why do we pay National Insurance contributions (NICs)?
National Insurance was introduced in 1911 to give workers some security if they faced difficult times. They contributed via their wages and could claim from the fund, for example if they lost their job.
The scheme has changed and adapted over the past 100+ years. Workers, including the self-employed, pay National Insurance contributions to qualify for certain benefits and for the state pension when they retire. They are not paid by anyone over the state pension age, even if they still work.
Employers pay contributions based on a percentage of an employee’s salary. This is a legal requirement for businesses, and His Majesty’s Revenue and Customs (HMRC) can penalise companies for non-compliance.
What is changing with National Insurance in 2025/26?
Key changes include:
- The rate at which employers pay National Insurance goes up from 13.8% to 15%
- The secondary threshold, at which employers begin paying National Insurance, reduces from £9,100 per year to £5,000 per year
Please note this is not an exhaustive list of the tax changes introduced.
Make sure you are making and submitting the right deductions
Employers deduct NICs automatically from an employee’s salary via the Pay As You Earn (PAYE) scheme. They then submit the deductions to HMRC. Getting these figures right is their responsibility, not the employee’s.
As an employer, do you know how many of your employees these changes will affect? How many are paid at the new secondary threshold and how has this changed from the previous threshold? Does your monthly salary information feed into your payroll correctly, so the right deductions are made?
Workforce management software guarantees reliable payroll calculations
Payroll calculation is faster and more reliable with time and attendance software. You can remove manual re-entry, time-consuming tasks and potential sources of mistakes. Therefore, having efficient workforce management software should be your starting point.
Clocking-in systems are a key part of this. They simplify the procedures for managing your staff’s time and attendance. Good systems can handle all types of schedule, variable working time, and types of contract and organisation.
Save time, eliminate mistakes and ensure accuracy with Kelio’s payroll module
Kelio‘s complete workforce management solution includes a payroll module. This extracts all the required data for hours worked from the Time and Attendance module, transferring it directly to your payroll software. It interfaces with many payroll software packages, so there’s a great chance that yours is covered. You can also configure it to accommodate different employee categories and roles.
Your company may be part of a group or operate across several locations. That’s easy to handle; Kelio’s multi-company interface allows for centralisation and standardisation of files. And if you outsource payroll, simply export files via email or FTP.
Call us for a chat about how to manage your payroll more efficiently with Kelio Paylink.
