Employer's National Insurance

Conditions

1. Employer's National Insurance contributions (secondary Class 1 NICs) are an allowable business expense. GOV.UK's self-employed expenses guidance lists 'employer's National Insurance' as an allowable staff cost.
2. From 6 April 2025, the employer NIC rate is 15% on employees' earnings above the secondary threshold of £5,000 per year (£96 per week, £417 per month). These figures apply for 2025-26 and 2026-27 and represent significant changes from the pre-April 2025 position, when the rate was 13.8% and the secondary threshold was £9,100 per year.
3. A 0% employer NIC rate (rather than 15%) applies to earnings up to the relevant upper secondary threshold for: apprentices under 25, employees under 21 and qualifying armed forces veterans in the 12 months from the start of their first civilian job (up to £50,270 a year for 2026-27), and eligible employees who work in a special tax site within a Freeport or Investment Zone (up to £25,000 a year for 2026-27). Earnings above the relevant threshold are charged at the normal 15%. The thresholds are published on the GOV.UK rates and thresholds for employers page.
4. The Employment Allowance allows eligible employers to reduce their annual employer NIC liability by up to £10,500 (2026-27, confirmed from GOV.UK — same as 2025-26). It is claimed through PAYE payroll software and offset against NIC payments through the year. An eligible employer whose employer Class 1 NIC for the year is below £10,500 pays none of it, as long as none of it is for employees who cannot be included in the claim. Certain employees cannot be included, such as someone whose earnings are within IR35 ‘off-payroll working rules’, or someone you employ for personal, household or domestic work (like a nanny or gardener) unless they’re a carer or support worker. The allowance does not cover the employer NIC on them. HMRC's guidance says that if your company has only one director, they must not be the only employee liable for secondary Class 1 National Insurance: a limited company whose director is the only employee paid above the secondary threshold is not eligible, even if it has other employees paid below it. If the company later has more than one employee earning above the threshold, it can become eligible for the whole year. If this could apply to your company, check with an accountant before claiming. Check the GOV.UK Employment Allowance page for current eligibility conditions — other employers are excluded too.
5. A sole trader who employs staff pays employer NIC on employees' wages — this is an allowable business expense. A sole trader's own National Insurance is not an allowable expense: HMRC allows no deduction for National Insurance contributions other than employer (secondary Class 1), Class 1A and Class 1B contributions (BIM42523).
6. For a limited company, employer NIC on the company's payroll — including on the director's salary — is an allowable corporation tax deduction.
7. Employees cannot deduct their employer's NIC on their own wages: ITEPA 2003 s360A(1) allows no deduction from employment earnings for National Insurance contributions. Statute does give relief in particular cases, including the two below. Whether either applies turns on your own circumstances, so speak to an accountant or tax adviser before relying on one. First, where an employee has agreed to let the employer recover, or has taken on by an election, the employer's NIC on a gain or amount from employment-related share options, restricted securities or convertible securities, relief is given by deduction from that employment income (ITEPA 2003 s481, s428A and s442A). Second, an employee who themselves employs someone, such as an assistant, may be able to deduct the employer's (secondary Class 1) NIC they pay where it is allowable under the general rule for employee expenses, the travel expense rules or the rule for ministers of religion (ITEPA 2003 s360A(2) and (3)); HMRC's Employment Income Manual (EIM32415) sets out the limited cases where an assistant's wages qualify.

Common mistakes

• Using the pre-April 2025 rate of 13.8% or the former secondary threshold of £9,100 per year when calculating employer NIC for 2025-26 or 2026-27 — these figures no longer apply.
• Forgetting to claim the Employment Allowance — eligible employers can reduce or eliminate their employer NIC bill entirely, but it must be actively claimed through the payroll software.
• Confusing employer (secondary) NIC with the employee's (primary) NIC. Employer NIC is an additional cost on top of the wage; employee NIC is deducted from the employee's pay and remitted to HMRC alongside the employer NIC.

What to keep

• Payroll records showing employer NIC calculated per employee and per pay period.
• PAYE payment records showing amounts remitted to HMRC each month.
• Employment Allowance claim records confirming the allowance was applied.

Real-world example

A limited company has three employees each earning £30,000 per year in 2026-27. Employer NIC on each is 15% × (£30,000 − £5,000) = £3,750. Total employer NIC is £11,250. The company claims the Employment Allowance (£10,500), leaving a net employer NIC bill of £750. Employer NIC is an allowable Corporation Tax deduction for the company (BIM42523).

Frequently asked