From 1st April 2025, major changes to the UK’s Employment Allowance and National Insurance rules will take effect, impacting Care businesses of all sizes.
“We heard about the changes to the employment allowance mentioned in the November budget but were not clear what it meant financially for us as an independent Herts charity providing social care.
After talking with our auditors and payroll provider, we now understand that we are eligible to claim £10,500 of our NI costs back from 1st April 2025. It does not cover all of the additional NI costs that we will face but it’s certainly worth making the claim to help make things a little easier for us in the year ahead.
Our payroll provider will now ensure that we draw down this allowance each month and it is then offset against our NI costs. It’s certainly worth looking to see if you are eligible to claim this allowance.”
Jane Pattinson
Chief Executive
Watford Mencap
Here’s what you need to know…
Key Changes:
- Employment Allowance Doubled: Small Care businesses will be able to claim up to £10,500 off their National Insurance bill (previously £5,000).
- Higher Employer NICs: The tax rate rises from 13.8% to 15%.
- Lower Tax-Free Threshold: Care businesses will start paying NICs on wages above £5,000 (down from £9,100).
- More Care Businesses Eligible: The £100,000 NIC cap is removed, allowing larger Care firms to benefit – but they’ll still pay significantly more overall.
Winners & Losers:
- Small Care businesses with a few employees benefit most, as the increased allowance offsets the tax hike.
- Medium and large Care businesses face bigger tax bills, despite now qualifying for the allowance.
- Single-director Care companies miss out—you need at least two employees earning above £5,000 to claim.
What This Means for You:
- If you run a small Care company, you’ll save on NIC costs.
- Bigger employers will pay significantly more in tax.
- If you work through an umbrella company, speak to them about major changes.
How to Claim:
Employers can apply via payroll software when submitting tax details to HMRC. If you are already claiming, it rolls over automatically if you’re still eligible
The Bottom Line:
These tax shifts offer relief to smaller Care businesses but hit larger ones hard. Employers need to reassess their payroll strategy to manage these costs in 2025.
The current. Gov page is slightly confusing as still relates to previous years, but keep an eye on it, as these changes take effect on 1st April 2025. Talk to your Payroll firm or department for more information: https://www.gov.uk/government/publications/employment-allowance-more-detailed-guidance/employers-of-care-and-support-workers-and-employment-allowance-further-employer-guidance
“We heard about the changes to the employment allowance mentioned in the November budget but were not clear what it meant financially for us as an independent Herts charity providing social care.
After talking with our auditors and payroll provider, we now understand that we are eligible to claim £10,500 of our NI costs back from 1st April 2025. It does not cover all of the additional NI costs that we will face but it’s certainly worth making the claim to help make things a little easier for us in the year ahead.
Our payroll provider will now ensure that we draw down this allowance each month and it is then offset against our NI costs. It’s certainly worth looking to see if you are eligible to claim this allowance.”
Jane Pattinson
Chief Executive
Watford Mencap