The HMRC SDST has issued the following confirmation information to the software developer community on the changes to National Insurance which apply from 6th April 2025.
On 30 October, the Government announced changes to the National Insurance contributions (NICs) Secondary Threshold, Secondary Class 1 rate, an increase in Employment Allowance (EA), and the removal of the EA threshold, all from 6 April 2025.
Key measures of the Government announcement, which will impact payroll software, include:
- A decrease to the NICs Secondary Threshold from £9,100 to £5,000. The new threshold will remain frozen from 6 April 2025 until 5 April 2028. The Secondary Threshold will be increased in line with CPI from 6 April 2028.
- An increase to the main rate of Secondary (Employers) Class 1 NICs from 13.8% to 15% for earnings paid on or after 6 April 2025 and for the remainder of the 2025-26 tax year.
- From April 2025, the maximum EA will increase from £5,000 to £10,500.
- Removal of the restriction that currently applies to EA where employers who have incurred a secondary Class 1 NICs liability of more than £100,000 in the previous tax year are unable to claim it.
Please find attached confirmation of the NICs rates and thresholds from 6 April 2025. Updated NICs guidance for software developers will be published on GOV.UK in due course. We are currently working to provide you with payroll test examples and the EB5 and are targeting publication in late November.
Additional notes and items this indicates
The additional elements of interest which may not have been evident from the initial announcements made within the budget speech:
- The document issued identifies an adjustment to the Lower Earnings Limit (LEL) reflecting a £2 increase per week from the former £123 per week to a new £125 per week from 6th April 2025. The LEL is not connected to the Pension Lower Threshold but often is aligned with qualifying for Statutory Payment for sickness, maternity and other parental leave payments.
- This notification also confirms a changed position on the qualifying conditions for the increase Employment Allowance of £10,500 indicating the removal of the qualifying condition that secondary NIC contributions across an employer group could not exceed £100,000 in the prior tax year.
PAYadvice.UK 30/10/2024
Excellent article! Thanks for informing us about these changes to the NICS rates and thresholds. I will implement this knowledge in my own professional UK accountants business.