With the 2026/27 tax year now in effect, employers should ensure they are fully aligned with the current Employer National Insurance Contributions (NICs) and Employment Allowance rules introduced in April 2025.
Current Rules (2026/27)
- Employer NIC rate: 15%
- Secondary threshold: £5,000 per year
- Employment Allowance: up to £10,500
- Eligibility cap removed
What This Means in Practice
Increased Employer Costs:
- NICs apply sooner due to lower threshold
- Higher rate increases overall liability
Wider Access to Employment Allowance:
- More businesses qualify
- SMEs benefit most
Worked Examples
SME Example:
5 employees earning £30,000 each:
- Higher NIC bill
- Employment Allowance offsets up to £10,500
Director Example:
NIC applies above £5,000
- Salary/dividend mix should be reviewed
Employment Allowance Key Points
Eligible if:
- Business or charity with employees
- More than one employee or qualifying directors
Not eligible if:
- Single-director company
- Public sector majority work
What Employers Should Do Now (2026/27)
- Reassess NIC exposure
- Confirm Employment Allowance is applied
- Review director remuneration
- Improve payroll forecasting
- Check payroll accuracy
- Consider a payroll health check
How can Menzies help?
If you’re unsure whether your payroll is fully optimised, our payroll specialists can help assess costs, maximise allowances, and ensure compliance. Get in touch with the Menzies payroll team today.
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