Employer's National Insurance

Conditions

• 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 (updated November 2024).
• 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. Source: GOV.UK rates and thresholds for employers (verified June 2026 — re-check after each Budget).
• A 0% employer NIC rate (rather than 15%) applies for earnings above the relevant upper secondary threshold for: apprentices under 25, employees under 21, qualifying armed forces veterans in their first year of civilian employment, and employees in eligible Freeport or Investment Zone positions. The current upper secondary threshold for these categories is published on the GOV.UK rates and thresholds for employers page.
• 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. A business whose total employer NIC for the year is below £10,500 pays no employer NIC at all. Check the GOV.UK Employment Allowance page for current eligibility conditions — some employers are excluded.
• A sole trader who employs staff pays employer NIC on employees' wages — this is an allowable business expense. A sole trader does not pay employer NIC on their own drawings.
• For a limited company, employer NIC on the company's payroll — including on the director's salary — is an allowable corporation tax deduction.
• Employees cannot claim their employer's NIC as a personal tax deduction — it is entirely the employer's liability and cost.

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. The full £11,250 of employer NIC is an allowable corporation tax deduction — the Employment Allowance reduces what is paid but not what is deductible.

Frequently asked

Related allowances