In April 2025, we see the new government introduce an Employers NICs rise from 13.8% to 15%, we also see them reduce the threshold at which the NICs from £9,100 to £5,000 per year. Not great news for contractors!

Now as we all know (before I get moaned at) that the Employers NICs comes from the assignment rate given to the contractor before we reach the taxable salary. We have some agencies who are seeking an uplift from the end client to ensure that the cost is not passed down the chain, as it should be. However, we know in reality that rates probably wont change. So I thought it might be an idea to have a look at the impact and what you coudl do to try and mitgate some of the increase...

In a standard example with a 1257L X tax code; someone on £400.00 per day, the ERs NICS pre Apr25 would have been around £217.00 per week, post Apr25 this will increase to around £243.00 per week, so in order to achieve the same net take home you would need a day rate increase of around 1.70% to cover this uplift in ERs NICs. Or take the £3.00 per day hit on the take home that it causes.

So just food for thought it you are not likely to get an increase, the only way at present to try and negate this is to up pension contributions. As long as your umbrella company is taking salary sacrifice pension, then the deduction is taken from the assignment rate and as such reduces the tax and both sets of NICs, thus putting the saving into your pocket for retirement.

I hope that this of use.