Discover how salary sacrifice schemes can support staff and help businesses save vital funds in the face of rising National Insurance costs in 2025
National Insurance changes—coming April 2025
Labour's 2024 Autumn Budget introduced two big changes that could impact UK businesses—and they're coming into play on 1st April with the 2025/2026 tax year.
Employer National Insurance contributions are going up, and the earnings threshold for when employers start paying NI is coming down. Together, these changes mean businesses will face higher payroll costs, so it's important to know the details and get prepared.
Here’s what you need to know:
- The employer’s NI contributions rate is set to rise from 13.8% to 15% in April 2025
- The secondary threshold (the earnings level at which employers start paying NI) will drop from £9,100 to £5,000 when contributions are due
What the NI increase means for employers
These changes will likely mean higher costs for businesses—and potential wage stagnation for employees. With the increase in employer NI contributions, companies could see their payroll expenses go up and their profit margins shrink. This makes it harder for businesses to offer pay rises or hire new staff—especially in today's competitive job market.
For example, a business with 50 employees earning a median salary of £31,000 could see their annual NI bill rise by around £900 per employee. On the other hand, employers with staff on lower earnings may be looking at a £770 increase per employee.1
If companies struggle to absorb these additional costs, employee wages could stagnate—which can hurt morale, productivity and retention. Balancing these costs will be key for businesses moving forward.
What is salary sacrifice?
Are you a leader looking to stretch your budget in light of Labour’s new plans? Salary sacrifice employee benefits could be the answer.
Salary sacrifice provides a way for businesses to save on NI costs while offering employees a range of exciting and meaningful benefits. Employees agree to give up part of their salary in exchange for non-cash perks—reducing both the employer’s and the employee’s NI contributions.
Using salary sacrifice to mitigate NI costs for employers
Salary sacrifice schemes also offer a smart way for employers to offset some of the impact of rising NI costs. Because certain salary sacrifice allows employers to save on NI contributions, businesses can free up funds that can then be reinvested into growth or passed on to staff as incentives. For public sector organisations, these savings may be boosted by reduced employer pension contributions, too.
Since 2014, our client, Lancashire and South Cumbria NHS Trust, has saved over £750,000 through Vivup’s salary sacrifice benefits. The more employees who get on board, the bigger the savings for the organisation. It's a clear example of how offering these benefits can have a real, long-term impact—cutting costs and creating value for everyone.
Embracing salary sacrifice schemes can turn budget challenges into opportunities, strengthening your team and building a resilient, future-focused business.
How Vivup can help
Here at Vivup, salary sacrifice is kind of our thing. We’re experts at helping businesses like yours reduce NI costs while offering employee benefits that really matter.
From Home and Electronics to Gym Membership, Cycle to Work schemes and Car Leasing, our salary sacrifice benefits provide great savings for employers and fantastic support for employees. But these benefits do more than just cut costs—they can elevate employee wellbeing, drive job satisfaction and help you hold onto talent for the long haul.
Feel the benefit in your business
Want to learn more about how salary sacrifice benefits could support your people and your organisation in 2025? Discover real-world tips, testimonials and insights from expert speakers in our latest Perkbox Vivup webinar.
1 Increase in employer National Insurance contributions by employee earnings, 2025–26 | Institute for Fiscal Studies
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