From 6 April 2025, there will be several significant changes to the National Insurance regulations for businesses, some of the most important changes being:
The rate at which employers must pay National Insurance contributions (NICs) will increase from 13.8% to 15%.
The Secondary Threshold, which is the level of earnings at which a worker’s employer must pay secondary Class 1 NICs, will be reduced from £9,100 to £5,000 per year.
The Employment Allowance will increase from £5,000 to £10,500 annually and will now be available to all businesses regardless of their total NIC bill.
Flexible and temporary staff will not be exempt, meaning that businesses that employ any type of worker need to be aware of these changes.
While these changes may add costs to businesses, there are also changes that may make things easier for businesses too. The Employment Allowance is like a discount on the National Insurance bill for eligible businesses. Right now, businesses can reduce their NI payments by up to £5,000 per year, but from April 2025, this will increase to £10,500.
This means that if a small business owes £9,000 in employer National Insurance, it will now pay £0, as the full amount is covered by the allowance. If its NI bill is £12,000, it will only need to pay £1,500.
However, agency worker pay is not included in this allowance, leaving the whole of it for internal staff.
The allowance is designed to encourage businesses to hire more staff by offering relief on NICs, thus lowering the cost of employment. From April 2025, this allowance will increase, enabling more businesses to benefit from reduced NI costs. Additionally, the previous cap where businesses with secondary Class 1 NICs of £100,000 in the previous tax year were ineligible for Employment Allowance will be removed, allowing larger businesses to also access this benefit.
Important: Agency workers' NI never counts toward Employment Allowance eligibility or limits. Even if a large company hires a high volume of temporary staff, its Employment Allowance applies only to its directly employed workforce’s NI contributions.
How Coople can support you:
Staffing flexibility: Adjust team hours with no minimum shift length to better align with your budget.
Immediate staff availability: Access our pool of experienced, pre-screened staff to implement changes quickly and maintain operational excellence.
Scalable workforce solutions: Whether you need one or one hundred workers, we deliver consistent quality across all roles.
Tech-enabled monitoring: Our platform offers precise control and detailed analysis of your temporary workforce, helping you to optimise costs and efficiently meet demand.
FAQ
Are agency workers’ National Insurance (NI) contributions excluded in all cases?
Yes, they are excluded in all cases from the Employment Allowance calculation because the staffing agency is the employer of record and is responsible for paying their employer NI contributions—not the client company.
What about large companies with high NI bills?
If a company sources a large number of temporary staff through a staffing agency and also has a directly employed workforce, its Employment Allowance eligibility depends on its direct employee NI bill, excluding agency staff. Here’s how it works:
If their direct NI bill is under £10,500, the company pays £0 in employer NI (fully covered by EA).
Agency staff’s NI contributions do not reduce this allowance, since the agency is responsible for paying them.
If their direct NI bill exceeds £10,500, the company must pay the NI contributions above this limit on its own employees.
Agency workers' NI still does not count toward this limit—so their Employment Allowance is applied only to their directly employed staff.
Example scenario for a large company:
A company has £20,000 in employer NI contributions for its directly employed staff.
It also hires a large number of agency workers through Coople, and the agency handles all their NI.
The company gets the £10,500 EA applied to its direct employees’ NI but must pay the remaining £9,500.
The NI on agency workers remains separate and does not affect this calculation.