How The Employers NI increase will affect Nannies from 1st April 2025

The 2024 Autumn Budget has brought significant changes for employers, including a major increase in Employers National Insurance (NI) contributions. From 1st April 2025, the Employers NI rate will rise from 13.8% to 15%. While larger organisations will certainly feel the impact, what does this mean for families who employ just one individual, such as a nanny? Let’s take a  look.

What is Employer’s National Insurance (NI)?

Currently, Aas an employer, in addition to your nanny’s wages and Employee NI contributions, you must pay Employers National Insurance if your nanny earns above £242 per week (or £1,048 per month). If their earnings are below this threshold, you don’t need to pay Employers NI, but you may still need to deduct Employee NI and Income Tax depending on the earnings.

When will the increase in Employers National Insurance take effect, and what changes will be made to the rate and threshold?

The increase in Employers’ National Insurance will take effect on 1st April 2025.

The rate will rise from 13.8% to 15.0%, and the threshold for contributions will be reduced from £9,100 to £5,000.

Consequently, from April 2025, employers will be required to pay NI at a rate of 15.0% for employees earning over £5,000.

As a rough guide as all individual cases vary; a nanny on a full time salary over 50 hours and earning £46800 pa,  the Employers NI will increase by roughly £1067 a year. A nanny on a 30 hour week salary and earning £26,000, the Employers NI will increase by £818 a year.

Additional Considerations for Families

Aside from NI, as an employer you need to:

• Register with HMRC as an employer.
• Deduct Employee NI and Income Tax from your nanny’s pay.
• Provide a written employment contract that outlines terms and conditions.
• Consider pension contributions if your nanny meets the eligibility criteria.
• Always negotiate salary in gross terms (before tax and NI is deducted).

Always use a reputable nanny agency and payroll to keep you guided through HMRC.