What’s the Deal with the New Employer National Insurance?
In April 2025, the UK government ups the Employer’s National Insurance (NI) stake from 13.8 % to 15 % and slashes the threshold from £9,100 to £5,000. That means companies are now paying more every single time they bucket a worker onto their payroll.
Why the Lift? The IR35 Connection
The hike is tightly knitted to the off‑payroll working rules (also called IR35). Those rules moved the burden of deciding a contractor’s tax status from the freelance worker to the company that hires them. If the contractor is thought to be working “inside IR35” (more like a normal employee) but is actually “outside” (true self‑employed), the company now owes the extra tax.
Companies’ Workarounds—Now They’re Paying More
- Many firms, after the IR35 changes, decided to shove every contractor into their payroll—often through umbrella companies—even if they were legitimately self‑employed.
- This blanket workaround was already costly: businesses were paying at least 13.8 % extra on every self‑employed engagement.
- With the new 15 % rate, that overhead has gone up, turning an already expensive practice into a bigger financial headache.
The Message from Qdos
“The tax hike must become a catalyst for a rethink,” counsel Qdos, a specialist in IR35. Seb Maley, the CEO, says:
“Companies have been shelling out extra money on contractor bans that ignore the true employment status. How many contractors were dumped onto payrolls just to stay compliant? Every move has now cost them more, and the new NI rate only makes that pain sharper.”
Maley adds that firms which perform well‑informed status checks can still welcome self‑employed talent confidently and profitably. Those stuck with blanket contractor bans, however, are set to feel the brunt of the increase.
Bottom Line
When the law nudges businesses toward a more employee‑like billing model, the cost side grows. It’s high time companies review the real tax landscape and decide whether the “all‑contractors‑on‑payroll” strategy is worth the extra money.
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