From April 2025, National Insurance (NI) contributions are set to rise — and for UK businesses, that means a direct impact on payroll costs, employee take-home pay, and overall business expenses.

In this blog, we’ll break down exactly what’s changing, who it affects, and how employers can prepare ahead of the curve.

The government has announced an increase to National Insurance contributions for both employees and employers, coming into effect at the start of the new tax year in April 2025.

While exact percentages may vary depending on your earnings or sector, the main changes are expected to include:

• An increase in Class 1 contributions (paid by both employees and employers)

• Higher contributions from businesses with salaried staff

• Possible shifts in thresholds that determine who pays what

These changes are designed to raise additional revenue for public services — but for businesses, it means higher wage-related costs.

For employers, the rise in NI contributions means a bigger chunk of your payroll now goes to the government. Even a small percentage increase can add thousands to your annual costs, depending on the size of your team.

Key impacts:

• Increased employment costs for each staff member

• Tighter cashflow for small and medium-sized businesses

• The need to re-evaluate payroll systems, staffing strategies, and overall budget forecasts

While much of the conversation is around employer costs, the impact on employees shouldn’t be overlooked. Higher NI contributions can result in reduced take-home pay, particularly for those earning just above the primary threshold.

Employers may need to prepare for:

• Staff queries about payslips and deductions

• Increased pressure for pay rises or benefit adjustments

• A more transparent approach to payroll communications

Here’s how smart businesses are getting ahead:

✅ Review your current payroll structure — are you compliant, and are your systems optimised for the new rates?

✅ Open a dialogue with staff early — letting them know about upcoming changes builds trust.

✅ Assess all business costs — with payroll costs rising, now’s the time to scrutinise other operational expenses, like payment processing fees.

💡 If you’re still using outdated payment systems or overpaying on card transaction fees, this National Insurance rise might be the perfect trigger to review your entire financial setup.

Changes like these aren’t always welcome — but they can be the perfect nudge to rethink outdated systems, improve efficiency, and take control of business costs.

At A2B Payments, we work with businesses across every industry to streamline payment processing, reduce hidden fees, and help you keep more of what you earn.