From 6 April 2026, there is no further rise in the main employer National Insurance rate. On paper, that sounds like stability. In practice, many employers will still see their National Insurance bill rise.
That is because the employer Class 1 NIC rate remains at 15%, while the Secondary Threshold stays fixed at £5,000 per year, and the government has confirmed that this threshold will remain at that level until April 2031. As pay increases, a greater proportion of earnings falls into charge, even though the rate itself is unchanged.
For employers, this is the real issue. The freeze is not a freeze in cost. It is a freeze in thresholds, with rising payrolls doing the rest.
1. The Main Employer NI Position for 2026/27
For the 2026/27 tax year, the key employer National Insurance rules are now confirmed.
The secondary Class 1 NIC rate remains 15%. Employers start paying secondary Class 1 NIC once an employee’s earnings exceed the Secondary Threshold of £5,000 a year, which is roughly £96 per week or £417 per month. Class 1A NIC on benefits also remains at 15% for 2026/27.
For standard employer Class 1 NIC, there is no general upper earnings ceiling where liability stops. Employer NIC continues at the applicable rate on earnings above the threshold, subject to specific reliefs and upper secondary thresholds for certain categories such as veterans, under‑21s and qualifying apprentices.
2. Why the Freeze Still Increases Employer Costs
A frozen threshold does not mean a frozen bill. If pay rises, more of each employee’s earnings sits above the £5,000 threshold and becomes chargeable at 15%.
After the April 2025 change, when the employer Secondary Threshold was reduced to £5,000 and the employer rate increased to 15%, employers are operating within a structure that already produces higher employment costs. From April 2026, that structure simply continues, meaning payroll growth steadily increases employer NIC exposure.
3. A Simple Example
Take an employee on a salary of £35,000 in 2026/27.
The employer starts paying NIC once earnings exceed £5,000, so NIC is charged on £30,000. At 15%, that creates an employer NIC cost of £4,500 for that employee.
If that employee receives a pay rise of £2,000, the extra salary is also fully within the employer NIC charge. The pay rise therefore costs the employer £2,300, before pension costs and other employment overheads are considered.
Across a wider workforce, the additional cost can become significant very quickly.
4. Employment Allowance Still Matters
The Employment Allowance remains one of the most useful protections for eligible employers.
For 2026/27, the allowance remains at £10,500. This can reduce an eligible employer’s annual secondary Class 1 NIC bill and, for some smaller businesses, significantly soften the impact of the frozen threshold.
However, once payroll expands beyond the allowance, employer NIC once again becomes a structural employment cost that grows alongside salaries.
5. Other Employer Changes from April 2026
There are several related changes employers should be aware of for the 2026/27 tax year.
National Minimum Wage increases
From 1 April 2026, the National Living Wage for workers aged 21 and over rises to £12.71 per hour. Other minimum wage rates also increase. For businesses with hourly‑paid workforces, this raises payroll costs and can increase employer NIC exposure even without changes to staffing levels.
Veterans NIC relief extended
The relief for employers hiring qualifying veterans has been extended until April 2028. During the first year of a qualifying veteran’s civilian employment, employers can apply a 0% secondary Class 1 NIC rate on earnings up to £50,270.
Umbrella company non‑compliance rules
From 6 April 2026, new joint and several liability rules are being introduced to address PAYE and NIC non‑compliance in the umbrella company market. Recruitment agencies or end clients may become responsible where PAYE and NIC obligations are not properly met.
6. What This Means in Practice
For most employers, the core message is straightforward.
The 2026/27 rules do not introduce another headline increase in the main employer NIC rate. However, the £5,000 Secondary Threshold remains frozen for several years, meaning that wage growth, recruitment, bonuses and minimum wage uplifts will all translate into higher employer NIC costs over time.
This is particularly important for owner‑managed companies reviewing director salaries, labour‑intensive businesses, employers planning 2026 pay reviews, businesses scaling headcount, and employers with significant hourly‑paid workforces.
7. Planning Points Before 6 April 2026
This is not just a payroll issue. It is a business planning issue.
Key actions for employers include reviewing whether the Employment Allowance is being claimed correctly, modelling the full cost of pay rises in 2026, checking whether veterans NIC relief could apply, and assessing whether labour supply arrangements involving umbrella companies create additional PAYE and NIC risk.
Where directors or shareholders take remuneration through a mix of salary and dividends, this is also a sensible time to revisit whether the structure remains tax efficient.
The Key Point
The employer NI rate may be unchanged at 15%, but that does not mean employer NI costs are standing still.
With the Secondary Threshold fixed at £5,000 and wage levels continuing to rise, many businesses will pay more employer National Insurance in 2026/27 even without any further rate increases. The freeze therefore represents a cost pressure that builds gradually over time.
Final Thought
A quote from our Principal, Sunil Aggarwal:
The key issue for employers is not the rate, but the threshold. With the Secondary Threshold fixed until 2031, businesses need to factor employer NIC into pay reviews, hiring plans and long-term cost modelling.
At DRS Tax and Business Advisors, we help employers and owner‑managed businesses assess payroll cost exposure, review Employment Allowance eligibility, and structure remuneration efficiently in light of changing NIC rules.
If you would like to review how the April 2026 employer NI position will affect your business, please get in touch.
You can:
- Email: info@drs-tax.com
- Telephone: 020 8059 1891
- Submit an enquiry via our Contact Us page
You can also book a free 15-minute consultation to review your position and next steps.