Overview

This bill makes changes to National Insurance contributions for employers in the UK. It increases the rate of secondary Class 1 contributions, adjusts the secondary threshold, increases the employment allowance, and removes a £100,000 threshold for the allowance.

Description

The bill modifies the Social Security Contributions and Benefits Act 1992 and related legislation. Key changes include:

• Increased Secondary Class 1 Contribution Rate: The rate of secondary Class 1 National Insurance contributions paid by employers will increase from 13.8% to 15%, effective April 6, 2025.
• Lowered Secondary Threshold: The secondary threshold, the earnings level below which employers don't pay secondary Class 1 contributions, will be significantly reduced. For 2025-26, this will change from £175 to £96, with corresponding changes to related thresholds.
• Increased Employment Allowance: The employment allowance, a tax break for employers, will increase from £5,000 to £10,500, effective April 6, 2025.
• Removal of £100,000 Threshold for Employment Allowance: The bill removes the existing £100,000 threshold for the employment allowance, meaning more businesses will be eligible for the full amount.

Government Spending

The bill is expected to increase government revenue from National Insurance contributions due to the increased rate and lower threshold. Precise figures on the overall impact on government spending are not provided in the bill text itself.

Groups Affected

• Employers: Most employers will face increased National Insurance contributions due to the higher rate and lower threshold. However, many will also benefit from the increased employment allowance.
• Small businesses: Small businesses are likely to be disproportionately affected by the change in the secondary threshold, as they are less likely to have as many workers earn above the threshold as large firms.
• The Treasury: The changes will likely increase government revenue through increased National Insurance contributions collected.

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