Surrey-based accountancy firm TWP is urging business owners to urgently review their payroll budgets and financial strategies ahead of significant changes to Employers’ National Insurance (NI) contributions, set to take effect from April 2025.

From April, the Employers’ NI rate will increase from 13.8 per cent to 15 per cent, while the threshold at which employers begin paying National Insurance Contributions (NICs) will drop from £9,100 to £5,000.

These changes are expected to place substantial financial pressure on businesses of all sizes, making proactive planning essential to minimise disruption and manage rising costs.

Emma Strugnell, Senior Payroll Client Manager at TWP, warned: “These changes represent a significant cost increase for employers, and time is running out to implement effective plans.

“Business owners must act now to fully understand how these adjustments will affect their payroll budgets and overall financial strategies. Delaying action could leave businesses facing unnecessary financial strain.”

While smaller businesses will benefit from the increased Employment Allowance of £10,500, larger organisations with substantial payroll expenses will face more considerable challenges.

It’s likely that some businesses will respond to these changes by limiting new hires. However, those aiming to continue their growth strategies must carefully consider their options.

Emma added: “With less than three months to prepare, businesses need to evaluate their approach.

“Some may consider passing on costs through price increases or streamlining workflows to boost capacity, while others might re-evaluate salary sacrifice schemes or adjust investment plans.

“Every business is different, and the best strategy will depend on individual circumstances.”

TWP stresses that professional advice will be critical to effectively navigate these changes.

“If you’re uncertain about how these changes will affect your business, it’s essential to contact your accountant as soon as possible.

They can offer tailored advice and help identify opportunities to offset these rising costs through strategic financial planning,” Emma concluded.

For expert, personalised support on managing the upcoming Employers’ National Insurance changes, please contact TWP today.