What is Employer's National Insurance (Class 1 Secondary)?

Full Definition

Employer's National Insurance (formally Class 1 Secondary Contributions) is the NI charge paid by employers on top of their employees' gross earnings. Unlike employee NI (Class 1 Primary), which is deducted from the employee's wages, employer NI is an additional cost borne entirely by the employer. From 6 April 2025: rate: 15% (increased from 13.8%); Secondary Threshold: GBP 5,000 per year (reduced from GBP 9,100 per year). Employer NI is due on earnings above the Secondary Threshold, calculated on a pay-period basis. For a full-time employee earning GBP 35,000 per year, employer NI is approximately (GBP 35,000 - GBP 5,000) x 15% = GBP 4,500 per year -- making the true employer cost GBP 39,500 even before pension contributions. The Employment Allowance reduces the employer's Class 1 NI liability by up to GBP 10,500 per tax year (2025/26 onwards), available to most businesses except single-director companies with no other employees. Employer NI also applies to benefits in kind reported on P11D as Class 1A (13.8%) and to approved share scheme awards in some circumstances as Class 1B. The reduction of the Secondary Threshold from GBP 9,100 to GBP 5,000 in April 2025 significantly increased the employer NI burden on part-time and lower-paid workers -- an employee working 15 hours/week at minimum wage now falls within the threshold much sooner.

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