National Insurance Changes in 2025: What Glasgow Employers Need to Know
From April 2025, big changes are coming to the National Insurance system—and they’ll directly impact how Glasgow-based businesses manage their payroll.
The UK Government is raising the employer National Insurance rate, lowering the threshold at which contributions begin, and significantly increasing the Employment Allowance for smaller firms.
The outcome? Some businesses will pay more—but others, particularly smaller employers, could actually end up paying less than they do today.
Here’s a breakdown of what’s changing, who’s likely to benefit, and what employers in Glasgow should be doing now to prepare.
Key Changes from April 2025
Effective 6 April 2025, three things are happening:
📈 1. Employer NICs Rate Increases
- From 13.8% → 15%
- This applies to all employee earnings above the new threshold (see below)
📉 2. Threshold Drops
- Employers will start paying NICs on earnings above £5,000 per year
- Currently, the threshold is £9,100, so more of each employee’s salary will be NIC-liable
💷 3. Employment Allowance Doubles
- Increases from £5,000 to £10,500
- This allowance offsets NIC bills for eligible employers (mostly small businesses)
Example: A Small Glasgow Business with Five Staff
Let’s walk through a real-world example using the National Living Wage expected from April 2025: £12.21/hour, or £22,207/year for a full-time 35-hour contract.
✅ Before the Change (2024/25)
- Employer pays NICs on earnings above £9,100
- NIC liability per employee:→ £13,107 × 13.8% = £1,809
- For 5 employees: £9,045
- After £5,000 Employment Allowance → Net NIC = £4,045
✅ After the Change (2025/26)
- NIC now applies to earnings above £5,000
- NIC liability per employee:→ £17,207 × 15% = £2,581
- For 5 employees: £12,905
- After new £10,500 Employment Allowance → Net NIC = £2,405
💡 Result: A Net Saving of £1,640
Despite a higher NIC rate and a lower threshold, this small Glasgow business is £1,640 better off, thanks to the bigger Employment Allowance.
Impact Varies by Business Size
Not every employer will benefit in the same way. Here’s what to expect based on business size:
🟢 Smaller Employers
- NIC bill under £10,500?→ You may pay nothing at all in employer NICs→ This is a win, even with the rate rise
🟠 Medium-Sized Employers
- You’ll exceed the £10,500 allowance→ You’ll feel the increase—but it may be manageable
🔴 Larger Employers
- You’re paying NICs on dozens or hundreds of staff→ The higher rate and lower threshold will result in a significant increase→ The £10,500 allowance won’t make much of a dent
What About Glasgow’s Key Sectors?
The effect of these changes will vary depending on industry:
🏨 Hospitality & Retail
- These sectors often operate on tight margins
- The NIC rise may pressure wages, pricing, or staffing
👩⚕️ Care Services
- Heavily reliant on public sector contracts
- Higher NIC bills may put pressure on service delivery unless funding adjusts
🧰 Trades & Local Services
- Many operate as small employers—this group may benefit most from the higher allowance
What Glasgow Employers Should Do Now
1️⃣ Run the Numbers
- Use payroll software or speak to your accountant to model April 2025 costs
- Factor in rising wages as well as NIC changes
2️⃣ Claim Your Allowance
- Employment Allowance is claimed through your PAYE system—make sure it’s being applied
3️⃣ Reassess Staffing Models
- Consider part-time, seasonal, or flexi-working strategies to manage costs
- Review salary sacrifice schemes or NIC-efficient benefits (e.g. pensions, EVs)
4️⃣ Stay Proactive
- Build the NIC rise into cashflow forecasts now
- Especially if you’re bidding for contracts or planning price adjustments
Final Thoughts
These changes to National Insurance aren’t just technical—they’ll affect real cashflow. For some Glasgow businesses, the changes will feel like a tax rise. For others, the doubled Employment Allowance will come as a welcome relief.
Whether you’re a café owner on Byres Road, a retail manager in the city centre, or running a trade crew out of the Southside, now’s the time to get ahead of this.
👉 Contact Glasgow Accountants – I’ll help you model the impact, apply for allowances, and manage the changes without surprises.