BUSINESSES across Cumbria are being urged to prepare for the new National Insurance (NI) contributions regime which takes effect from 6 April 2025.
Chancellor Rachel Reeves spun a complex web of legislative changes in her budget last year as she sought to fill a hole in the UK’s finances.
Now, with the Spring Statement on the near horizon and the NI changes looming, a leading accountant is urging businesses to make sure they are prepared.
Paul Hornby, the Managing Director of JF Hornby & Co, said: “Reeves gave with one hand and took with the other when she introduced changes to the National Insurance regime.
“For the majority of businesses, April will mark the dawn of a new, more aggressive era of taxation.
“Many leaders and business owners are bracing themselves for impact – with some staring down the barrel of a strong five figure increase in their NI liabilities.
“The best advice I can give to businesses is to invest time in understanding what the new regime means to them – and how it will impact their bottom line.”
In the 2024 Autumn Budget, Reeves announced the rate of employers’ NICs will increase from 13.8% to 15%, from April.
The level at which employers start paying NICs (the secondary threshold) will also reduce from £9,100 to £5,000 per year.
To help small businesses offset the increased NIC costs, the Employment Allowance, which helps eligible employers reduce their NIC liability, will increase from £5,000 to £10,500, and the £100,000 eligibility threshold will be removed.
The increase to the National Living Wage, rising to £12.21 per hour for people over the age of 21, will compound the effect.
For SMEs operating on tight margins, the cumulative impact could be significant.
“Every business is different,” added Paul. “Some will be hit harder than others depending on their wage structures, sector, and staffing models. That’s why we’re encouraging all employers to review their payroll and take advice early.
“With year-end planning under way for many firms, now is the time to assess the potential cost and explore opportunities for efficiency.
“If the NI changes are overwhelming you, speak to a qualified accountant who understands your business — not just the numbers.”
