What is the employer's National Insurance threshold?

Full answer

Employer's Class 1 National Insurance is a payroll tax paid by employers on top of employee salaries. It does not appear on employee payslips but directly affects the cost of employment. **2026/27 employer NI rates and thresholds:** | Threshold | Annual | Rate | |---|---|---| | Secondary Threshold (ST) | **£5,000/year** | Employer NI applies above this | | Earnings above ST | — | **15%** | **What changed from April 2025:** - Secondary Threshold cut from **£9,100 to £5,000** — increasing the employer NI bill for most workers - Employer NI rate increased from **13.8% to 15%** - These changes significantly increased employment costs, particularly for part-time and lower-paid workers **Employment Allowance:** Eligible employers can reduce their employer NI bill by up to **£10,500/year** (2026/27) via the Employment Allowance. Sole director companies with no other employees cannot claim it. **Other employer NI classes:** - **Class 1A:** Paid on benefits in kind reported via P11D (e.g. company cars). Rate: 15% - **Class 1B:** Paid on items included in a PAYE Settlement Agreement (PSA). Rate: 15% **Impact on salary vs dividend decisions:** For owner-directors, employer NI at 15% on salaries above £5,000 makes it more attractive to take a lower salary (e.g. £12,570 optimal salary = ~£11,500 employer NI saving vs £50k salary) and extract remaining profits via dividends, subject to corporation tax and dividend tax.

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