Employers National Insurance Rates Explained

Looking to understand employers national rates, how employers pay NI on the salaries they pay and benefits in kind? Then read on! Here you’ll find out more about employers national insurance rates and how much they pay.

Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.

1. Do Employers Pay National Insurance?

Employers are responsible for paying Class 1 employers national insurance for all members of their team that are on their payroll. Payroll is a list of employees that work for a business, for whom the business is responsible for paying via the PAYE system. If a business employs freelancers who are self-employed, then they’ll be paying them via an invoice and there is no additional national insurance to pay so this guide does not apply to them (unless they are in breach of IR35) because freelancers are outside of the PAYE regulations and are responsible for their own taxes.

2. How Much NI Does An Employer Pay?

Employers pay Class 1a national insurance on staff on their payroll above the secondary threshold. Below this level, the employer NI rate is 0% for certain employees under 21, apprentices under 25 and certain military veterans, which is known as the upper secondary threshold.

Employees pay different Class 1 national insurance rates through their payslips, again depending on their earnings and the applicable thresholds.

The main secondary threshold for NI for the most recent tax years are:

  • Tax Year 2021/2022: Over £170 per week/£737 per month/£8,840 per year 13.8%
  • Tax Year 2020/2021: Over £169 per week/£732 per month/£8,788 per year 13.8%

Upcoming changes to the secondary threshold have been announced as part of the Autumn Budget and include an increase of the employers’ NI rate payable to 15.05% from 13.8% from the tax year 2022/2023. That’s an increase of 1.25% in line with the new taxation for the NHS and social care. Read more about the Autumn Budget Changes here.

3. National Insurance on Benefits in Kind

Class 1a national insurance is payable by employers on benefits in kind given to employees such as private medical or a company car. Employees pay additional income tax on any benefits in kind they receive from their employer. Any additional national insurance payable needs to be reported to HMRC using P11d form and P11d(b) form.

Related:

Taxes are changing! From April 2024 sole traders will need to report their earnings and pay tax on a quarterly basis. This is known as Making Tax Digital, which you can read more about in this guide to help you get prepared.

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.