How to get ahead of the 2025 Employers’ National Insurance rise now

With the start date of April 2025 looming, is your business concerned about the impact of the Chancellor’s rise in National Insurance Contribution (NIC) rates?  

Against a backdrop of potential new tariffs on the horizon from the US Trump administration, ongoing supply chain disruptions, and the persistent ripple effects of global economic shifts, it’s understandable that businesses are feeling the pressure. 

The good news is there are ways to offset this financial challenge, and The CFO Centre is here to help you find clarity, control, and confidence. 

We’re already busy supporting clients with a range of measures designed to reduce the impact of the tax rises on overall profitability and build resilience against broader economic challenges. 

Every business is different, and we’re therefore devising plans to suit a wide range of sectors and stages. For example, if you’re in the hospitality trade and you employ lots of part-time shift workers, the impact will be greater across multiple part-time employees as opposed to fewer full timers. If you’re about to bring in lots of new hires, you might look to outsource support functions such as finance and HR, rather than directly employ. 

The initial choice often feels quite black and white: to reduce the employee cost base or to raise prices. But here’s how we’re helping our clients to look at other ways of mitigating the risks. 

Revisiting the employee cost base 

It’s important to know that this doesn’t have to mean making people redundant.  

Firstly, we’re helping our clients understand ways to reduce their NI bill by implementing employee benefits or salary sacrifice schemes. 

These reduce the salary value against which NI is charged by swapping money for benefits, which ensures your people are not disadvantaged. 

Typically, you can offer optical, dental or alternative health cover, helplines, gym memberships, or retail discounts through such schemes. These can be very low cost to you, due to potential economies of scale, and so they are an attractive option and could even replace an inflationary salary increase. 

We’re also looking at clients’ budget allocation and helping them to reforecast. If an annual salary rise was planned for 2025, businesses could use some or all this money to meet the additional NIC costs. Although this isn’t great news for employees, it does protect jobs and, by partnering this with salary sacrifice, damage to morale can be minimised. 

Turnover and forecasting tips 

Aside from raising prices, which is often the last resort, we’re helping our clients to revisit forecasts, especially in light of growth against borrowing. Forecasts set prior to the budget need careful attention to ensure the changes do not impact any borrowing covenants. If this is a risk, you may need to reduce investment in future growth to protect the current position. 

Forecasts are understandably becoming more conservative as the economic landscape shifts under our feet, with accuracy becoming more critical than ever.  

Having an experienced CFO on board is a lifeline at times like this because many businesses have very little ‘fat’ in their cost base so every variation against expectation is a risk. We work with clients to build flexible, scenario-based forecasts whether that’s in respect of NICs, tariff impacts or fluctuating market demand. 

Our overarching message in for businesses to be proactive. Don’t wait until the effective date for NICs, or for current unknown changes to manifest.  

We’d advise all employers to focus on their financials and make the most of management information to start recharting their course as soon as possible. 

Understanding your reality, knowing which numbers matter, and exploring other potential upsides such as tax reliefs, outsourcing to contractors or supplier contract renegotiations can help you protect the numbers that really matter – your prices, your people and your profit. 

Overcome the challenges of increased tax rates with an experienced CFO who can help you thrive in 2025. You can book a no-obligation, 30-minute discovery call by dialling 0800 169 1499 or completing our contact form.