Facing the 2025 National Insurance hikes
Since April 2025, UK employers face a challenging new reality: employer National Insurance (NI) contributions have jumped from 13.8% to 15%. The threshold has also dropped from £9,100 to £5,000 per year. The drop means employers must start paying contributions sooner and on a greater percentage of their gross salary. So, more tax on a greater share of every salary, just as budgets are already strained across sectors like hospitality, care, education, and non-profits. Over 940,000 employers are directly affected, and nearly half say these tax hikes are influencing recruitment decisions, while a third freeze or limit pay growth. For many HR professionals, this represents the most significant pressure on workforce costs in a decade.
Why Salary Sacrifice Is a game-changer
Salary sacrifice provides a proven, government-backed solution. When employees agree to 'sacrifice' a portion of their gross salary for a direct pension contribution, both they and their employer pay less in National Insurance. What’s more, these schemes are robust: they’re HMRC-compliant, work with auto-enrolment, and integrate easily with payroll systems. This flexible model means the savings can be substantial, a mid-sized business can save thousands of pounds per year by implementing pension salary sacrifice. Smart adoption of salary sacrifice gives HR leaders the ability to reinvest savings into staff rewards, protect jobs, and strengthen overall benefits.
The long-term view: Your strategic opportunity
The NI rise isn’t a temporary measure; it’s a structural, permanent shift. All sectors are under pressure and businesses simply can’t absorb these increased costs through efficiencies alone. Even with an increased Employment Allowance, most organisations will find it quickly used up. That’s why leading HR teams are transforming salary sacrifice from a ‘nice to have’ into a core part of long-term budget and people planning.
Rolling out a simple opt-out Pension Salary Sacrifice arrangement sends a powerful signal: that you’re adapting fast, controlling costs, and making a lasting difference for your people and financial sustainability.
Key changes
Employer NI rate pre/post change
2024 = 13.8% rate of NI
2025 = 15% ratio of NI
NI threshold per employee
2024 = £9,100
2025 = £5,000
"The savings are impactful. A 200 person company with an average salary of £45,000, would save around £60,000 per year with Pension Salary Sacrifice enablement!"
Insights for HR professionals
Talent attraction and retention:
In a tight labour market, enhanced pension contributions make your workplace stand out—91% of employers say tailored financial benefits improve retention.
Employee financial wellbeing:
With cost of living still biting, facilitating greater pension savings without reducing net pay is a meaningful gesture that signals long-term support.
Leadership credibility:
Early adoption of salary sacrifice positions you as a proactive leader who delivers tangible ROI to both the board and your people.
Operational simplicity:
With Aslan’s support, implementation is seamless and communications are crafted to drive high employee understanding and uptake.
Quick checklist: Launching Salary Sacrifice
- Are you clear on your annual projected NI cost increase?
- Have you mapped which staff could most benefit from salary sacrifice?
- Is your payroll system ready to support the new arrangement?
- Have you engaged employees with easy-to-understand communications?
- Are your team and leadership aware of the full compliance/process?
- Do you have a plan to reinvest organisational savings into rewards, staff welfare, or job protection?
Talk to Aslan
Ready to reduce your new National Insurance bill, boost employee loyalty, and show board-level impact, without extra admin?
Aslan’s team of benefits experts is here to walk you through every step, from setup to staff communication and ongoing ROI reporting. Book a discovery call with Aslan today and see how Salary Sacrifice could transform your HR outcomes this year.
