Changes to National Insurance and Employment Allowance for 2025/26 tax year.

At William Watson & Co Accountants Ltd, we continually seek guidance from regulated professional bodies like the AAT and Croners as well as HMRC.

Croners publish weekly blogs with guidance and tax updates. We share relevant updates from articles here that may be useful for clients to keep up to date with legislation.

We have summarised some key information that may be relevant for you below.

Please note, this information was published in June 2025 and legislative updates may have been made since. This information is generic and is not suitable for all businesses. Please get in touch for tailored advice.

Changes to National Insurance

There are big changes to NI contributions and the threshold has reduced from £9100 to £5000 with a rate increase from 13.5% to 15%.

Any employers who pay Class 1 NI at a higher rate will therefore have to begin paying earlier than they may have done in previous years.

Changes to Employment Allowance

Employemnet allowance has increased from £5,000 to £10,500.

The eligibility threshold has been removed so more businesses have access.

Please be aware, that in order to claim this allowance, you must have at least two directors or employees being paid a salary of over £5000 each. This allowance is not available to sole directors and the allowance can only be claimed against one payroll (so not relevant for those that have connected companies).

For more detailed information on the Tax rates, please visit HMRC's guidance on the following link.

HMRC Tax Rates 2025/26