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National Insurance Contributions (Secondary Class 1 Contributions) Act 2025

Contents

Commentary on provisions of the Act

Section 1: Rate of secondary Class 1 contributions

  1. Section 1(1) amends section 9(2) SSCBA 1992 to increase the main secondary percentage of Class 1 NICs paid by employers from 13.8% to 15%.
  2. Section 1(2) makes equivalent provisions for Northern Ireland by amending SSCB(NI)A 1992.
  3. Section 1(3) specifies that the amendments that are made by section 1 take effect from 6 April 2025.

Section 2: Secondary threshold for secondary Class 1 contributions

  1. Section 2(1) introduces amendments to S.I. 2001/1004.
  2. Section 2(2) amends regulation 10(d) of S.I. 2001/1004 by changing the weekly secondary threshold for secondary Class 1 NICs from £175 to £96.
  3. Prescribed equivalents ensure the threshold is reflective of an employment pay period. Section 2(3) amends regulation 11(3A) of S.I. 2001/1004 by replacing the monthly and annual prescribed equivalents of the secondary threshold as follows:
    1. In sub-paragraph (a), the monthly prescribed equivalent of £758, is replaced with £417.
    2. In sub-paragraph (b), the yearly prescribed equivalent of £9,100, is replaced with £5,000.
  4. Section 2(4) specifies the changes made by this section apply for the tax year 2025-2026 only.

Section 3: Increase of employment allowance and removal of £100,000 threshold etc

  1. Section 3(1) introduces amendments to the National Insurance Contributions Act 2014.
  2. Section 3(2) amends section 1(2)(a) NICA 2014 to increase the amount of employment allowance from £5,000 to £10,500.
  3. Section 3(3)(a) removes subsections (4B) to (4G) of section 2 of NICA 2014 which relates to the exclusion of persons from claiming the employment allowance where their secondary Class 1 NICs liability in the previous tax year is £100,000 or more. This also removes the associated state aid restrictions.
  4. Section 3(3)(b) removes the italicised heading which precedes sub-section 2(4B) NICA 2014.
  5. Section 3(4) specifies that the amendments made by section 3 come into force on 6 April 2025.

Section 4: Short title

  1. Section 4 gives the short title as the National Insurance Contributions (Secondary Class 1 Contributions) Act 2025

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