In this article
- Employer NIC changes in brief
- Employment Allowance and its impacts
- What can you do?
- How using a virtual assistant can help
- Making a strategic shift
Employer National Insurance Contribution changes in brief
We’ve summarised the main changes to employer national insurance contributions below:
Increase in employer NIC rate
The rate at which employers contribute to National Insurance Contributions (NICs) was raised from 13.8% to 15%, effective from April 2025. This hike directly increases the cost for every salaried employee a business employs. For mid-sized and larger enterprises with significant payrolls, the compounded cost could translate into a substantial financial burden. This change is aimed at bolstering government revenue, but it places pressure on companies that need to manage these higher expenses while maintaining workforce levels and wage structures.
Lowering of the contribution threshold
The threshold at which employer NICs become payable was lowered from £9,100 to £5,000 per year. This broadens the scope of contributions, impacting even lower-wage roles. For companies that rely on part-time or lower-salaried employees, this adjustment increases employment costs across a larger portion of their workforce, leading to strategic reconsiderations around staffing and budget allocations.
The financial impact of NICs on small business employers
Small and medium-sized enterprises (SMEs) often feel the strain of National Insurance Contributions more acutely than larger corporations due to their limited financial resources and smaller profit margins. For SMEs, NICs can significantly impact cash flow and limit opportunities for growth and development. A rise in employer NICs may mean that smaller businesses choose not to employ new people, or that they start to look for ways to optimise their current resources – perhaps reducing hours or looking for ways to share key tasks across fewer employees. They may also consider whether outsourcing certain tasks might be a more cost-effective option in the long term.
In contrast, large corporations typically have more substantial financial reserves and can absorb these costs more effectively, but they still face challenges such as increased operational expenses and compliance burdens.
Both types of organisations can benefit from innovative strategies to reduce NICs. A particularly useful approach for smaller and start-up businesses is to reduce employer National Insurance contributions by using a virtual assistant. This not only supports efficiency and productivity but also potentially reduces the need for hiring additional in-house staff, thereby lessening the NIC burden.
Employment Allowance and its impacts
The budget also increased the Employment Allowance from £5,000 to £10,500. This measure is intended to alleviate NICs for smaller businesses by providing an exemption on a portion of their NICs liability.
For very small businesses (i.e. 1-4 full time employees in total), this enhancement means they might potentially avoid employer NICs for the year but you should be aware that this may only apply in very specific circumstances.
For example, if you employ three people on the national minimum wage, and you only take the same wage yourself, you should be OK. If you run a professional services business like IT support or an accountancy practice, you might have fewer employees, but be paying much higher salaries – and it won’t be long before you’ve reached the allowance.
So there are some things to consider here:
- Even as a one-man or two-man band, the salaries you pay to yourself and to any employees may take you over the allowance threshold pretty quickly.
- You could employ two or three people on the national minimum wage, but employing anyone else – or paying yourself more than the minimum wage – could take you over the threshold.
- If you already employ more than three or four people, your employer NIC bill is likely to increase, and the allowance won’t cover you for long. So it might be prudent to look for a different staffing model.
So, while this relief looks like it might benefit one-man bands, entrepreneur businesses, micro businesses and very small businesses, these operations are actually potentially at as much risk as larger companies. Those businesses that exceed the allowance threshold will face a marked increase in their payroll tax obligations. As a result, even small and medium enterprises may need to explore alternative staffing arrangements – such as outsourcing to professional virtual assistants – to manage costs effectively. You can read more on this topic here.
What can you do?
The cumulative effect of these employer NIC changes and the enhanced Employment Allowance can lead to varied strategic responses:
Small businesses. Companies that qualify for the full benefit of the increased Employment Allowance may find that this partially offsets the increased NICs rate. This may enable them to sustain direct employment without incurring significant additional costs. However, these businesses need to carefully assess their annual payroll figures against the allowance cap to maximise the benefit. It may also be beneficial to outsource administration functions so that there is more allowance to cover employee roles that can’t easily be outsourced.
Mid-sized and larger businesses. These firms, typically exceeding the Employment Allowance cap, will face the full impact of the higher NICs rate and lowered contribution threshold. For these organisations, the budgetary squeeze may prompt shifts towards more cost-effective employment models. This includes hiring independent contractors and reducing employer national insurance contributions using virtual assistant companies (VAs).
How using a virtual assistant can help
Given the new cost pressures, outsourcing administrative and support functions to a virtual assistant company can significantly reduce your NIC bill. The core advantages for smaller businesses include:
- Cost Savings. Virtual assistant companies typically operate on a pay-as-you-go basis, allowing businesses to pay for services as needed rather than maintaining full-time payrolls. This avoids NICs and other payroll taxes, leading to substantial cost reductions, especially under the increased NIC rate. You can read more about the true cost of employing support staff here.
- Flexibility. The ability to engage virtual assistants for a specific number of hours provides budgetary flexibility, which is particularly valuable for managing fluctuating workloads, and works well for smaller businesses who may not need even a part-time employee, but just someone who can support them when needed.
- Professional support. Alongside lower costs, a professional virtual assistant company will have all the relevant insurances, training and data security procedures in place, giving you complete confidence in the service.
- Timeliness. Outsourcing is not just about saving money on salaries and National Insurance Contributions. It’s also about the time and energy you save by avoiding the recruitment process. As a small business owner, the recruitment burden is likely to fall on you. This reduces your own productivity – both during the recruitment process and afterwards, as you onboard and train new people – and can have a measurable impact on your bottom line. By leaving the recruitment, training and management aspect to an established VA company, you can focus on your own business with confidence.
And it’s important to choose the right type of virtual assistant support. A VA business will cover a wide range of tasks, and will have already managed the vetting process, investing in ongoing training so that you always have a professional VA working with you on your business. It should also have the proper data and cyber protections and relevant insurances in place, so you know you’re trusting your tasks to a serious and competent partner. These services may include:
Virtual PA services
- Virtual secretary services
- Diary management
- Email management
- Meeting preparation
Admin Virtual Assistant
- Data entry
- Supplier management
- Virtual phone answering service
Virtual Marketing Assistant
- Virtual research assistant
- Website virtual assistant, including WordPress and Ecommerce specialists
- Social media virtual assistant
- Email marketing management
- CRM management
- Content support
Sales Support
- Outsourced appointment setting
- Virtual assistant for lead generation
- Outsourced telemarketing
- Customer service virtual assistant
- Proposals and quotations
Finance Support
- Virtual bookkeeping invoicing
- Credit control outsourcing
- Expenses
Events and Travel Support
- Event planning virtual assistant
- Travel planning virtual assistant
Making a strategic shift
If you want to reduce your employer national insurance contributions using a virtual assistant – or you want to make a strategic pre-emptive decision to help reduce your bills, here are a few things you could do next.
- Build a network of contract workers. Expanding the use of freelance or contract-based roles can reduce NIC exposure and provide more flexible resourcing. Be aware of IR35 though, which may affect contractors who bill you through a limited company. Even though IR35 places the responsibility on the contractor, you should be aware.
- Role restructuring. You could run an analysis of the employed roles you currently have. This will give you the information you need to see if you can make any cuts or changes to help reduce your NIC bills, without compromising on quality or productivity.
- Outsource to a virtual assistant: Leveraging technology to maintain a leaner, more adaptable workforce with VAs for tasks such as administrative support, customer service, and data management – in fact, for any of the services in the list above.
While the increased Employment Allowance offers a buffer for smaller businesses, the overarching rise in employer NICs necessitates strategic adaptation across the board. Companies must weigh the benefits of in-house staffing against the flexibility and cost-effectiveness of hiring independent contractors or VAs. This environment underscores the importance of agile operational planning, where outsourcing certain functions becomes a practical means of maintaining competitiveness amid rising employment costs.
Are you ready to explore how you can reduce your employer national insurance contribution using a virtual assistant? It could be transformative to your business growth – and remove the concerns you have about the financial commitments of being an employer.
If you found this useful and you’d like to talk to us about how using a VA could help to reduce your NIC bill – or if you would like to know more about our other virtual assistant services – feel free to call us on 0800 994 9016 or use our contact form in the menu above.