{"id":27537,"date":"2024-12-10T11:18:30","date_gmt":"2024-12-10T11:18:30","guid":{"rendered":"https:\/\/smh.group\/?p=27537"},"modified":"2024-12-10T13:45:32","modified_gmt":"2024-12-10T13:45:32","slug":"how-changes-to-employer-nics-will-affect-businesses-and-workers","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/how-changes-to-employer-nics-will-affect-businesses-and-workers\/","title":{"rendered":"How Changes to Employer NICs Will Affect Businesses and Workers"},"content":{"rendered":"<p><strong>The Budget\u2019s increases in national insurance contributions (NICs) will have effects beyond just employers.<\/strong><\/p>\n<p>There were three main changes to employer\u2019s NICs announced in the Budget, all of which will take effect from April 2025:<\/p>\n<ul>\n<li>The secondary threshold \u2013 the starting point for payment of employers\u2019 NICs \u2013 will be cut from \u00a39,100 to \u00a35,000. The employee\u2019s starting point remains at \u00a312,570.<\/li>\n<li>The employer\u2019s NICs rate will rise from 13.8% to 15.0%.<\/li>\n<li>The employment allowance, effectively an employer\u2019s NIC credit, will be increased from \u00a35,000 to \u00a310,500.<\/li>\n<\/ul>\n<p>The cut in the secondary threshold is the biggest revenue raiser and the change provoking the most complaints from businesses in the retail, leisure and hospitality sectors. It is easy to see why. The NICs cost of employing a part-timer earning \u00a3175 a week goes up from nil to \u00a311.85 a week. That is before the 6.7% increase in the national living wage kicks in (or the double-digit increases for under-21s on the national minimum wage).<\/p>\n<p>The Office for Budget Responsibility (OBR) anticipates that employers will react in a variety of ways, including restricting future pay rises, reducing hours and cutting back on recruitment. There may also be a rise in self-employment (where the maximum total NICs rate is now 6%) and individuals working through one-person companies, although this is a contentious area. The line between a contractor and an employee has seen plenty of legislation and litigation over recent years.<\/p>\n<p>If you are already self-employed, then on purely tax grounds, the appeal of incorporating has been reduced by the rise in NICs. It had already been weakened by increased tax on dividends, which are now in many instances a more costly way for an owner-director to draw profits out of a company rather than taking a bonus.<\/p>\n<p>If you are an employee, then one indirect benefit you may see because of the NICs rise is the introduction (or improvement) of salary sacrifice schemes for pension contributions and, possibly, electric company cars. Both can save the employer NICs, part of which is often passed on to the employee.<\/p>\n<p>More detail on the change to employer\u2019s NICs can be found <a href=\"https:\/\/www.gov.uk\/government\/publications\/changes-to-the-class-1-national-insurance-contributions-secondary-threshold-the-secondary-class-1-national-insurance-contributions-rate-and-the-empl\/changes-to-the-class-1-national-insurance-contributions-secondary-threshold-the-secondary-class-1-national-insurance-contributions-rate-and-the-empl\">here.<\/a><\/p>\n<p>For more information,\u00a0<a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/contact\/\">contact us<\/a> on <strong>0114 266 4432<\/strong>\u00a0or email\u00a0<a href=\"mailto:info@smh.group\"><strong>info@smh.group.<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Budget\u2019s increases in national insurance contributions (NICs) will have effects beyond just employers. There were three main changes to employer\u2019s NICs announced in the Budget, all of which will take effect from April 2025: The secondary threshold \u2013 the starting point for payment of employers\u2019 NICs \u2013 will be cut from \u00a39,100 to \u00a35,000. The employee\u2019s starting point remains at \u00a312,570. The employer\u2019s NICs rate will rise from 13.8% to 15.0%. The employment allowance, effectively an employer\u2019s NIC credit, will be increased from \u00a35,000 to \u00a310,500. The cut in the secondary threshold is the biggest revenue raiser and the change provoking the most complaints from businesses in the retail, leisure and hospitality sectors. It is easy to see why. The NICs cost of employing a part-timer earning \u00a3175 a week goes up from nil to \u00a311.85 a week. That is before the 6.7% increase in the national living wage kicks in (or the double-digit increases for under-21s on the national minimum wage). The Office for Budget Responsibility (OBR) anticipates that employers will react in a variety of ways, including restricting future pay rises, reducing hours and cutting back on recruitment. There may also be a rise in self-employment (where [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":27534,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3,16],"tags":[1301,244,243],"class_list":["post-27537","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","category-financial-services","tag-2024-budget","tag-national-insurance-contributions","tag-nic"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Changes to Employer NICs Will Affect Businesses and Workers - SMH Group<\/title>\n<meta name=\"description\" content=\"The Budget\u2019s increases in national insurance contributions (NICs) will have effects beyond just employers.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Changes to Employer NICs Will Affect Businesses and Workers - 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