Published
By CPC Helpdesk
Following the Chancellor’s Autumn Budget at the end of October, CPC wanted to highlight to members the announcement that Employers' National Insurance (ER NI) thresholds would reduce to £5,000, while the rate of employers’ contributions would increase by 1.2% to 15%, each effective from April 2025.
It’s important to note that if you had a tender that included the transfer of staff (TUPE), your supplier can ask you to indemnify them against the increase, which is included in the CPC call off terms and conditions.
So, what will this mean to you? Taking, for example, a full-time worker working 35 hours a week, on the new National Living Wage of £12.21 (with effect from April 2025), the effect is as follows:
ER NI contributions, before the changes...
ER NI contributions:
Total earnings: £11ph x 35 hours x 35 weeks = £13,475
Contributions: ( (13,475.00 - 9,100) \times 0.138 = £603.75 )
ER NI contributions, after the changes...
Total earnings: £12.21ph x 35 hours x 35 weeks = £14,957.25
Contributions: ( (£14,975.25 - 5,000) \times 0.15 = £1,493.58 )
Therefore, an increase of £889.83 the employer has to pay in ER NI for this one employee.
The increase in the employer’s NI contributions is due to the new rate and lowered threshold represents a significant cost increase for your suppliers and their staffing costs. This could influence hiring and wage strategies and, importantly, has the potential to affect your financial model from your supplier, as they are entitled to pass these additional costs on. So, you need to be aware of this and plan for it ahead of time.
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