Could Employer National Insurance Be Cut in the October Budget?

Hiring a new employee is already expensive. But what if one change to Employer National Insurance could make it more affordable?

With the October 2026 Budget approaching, UK business groups are putting pressure on the government to ease the National Insurance burden on employers. The Confederation of British Industry (CBI) is calling for a higher earnings threshold, arguing that lower employment costs could help businesses recruit more staff.

But will the Chancellor respond to these demands, or will employers continue paying the same higher contributions? More importantly, could the upcoming Budget bring meaningful relief to your business?

Here’s what’s being proposed and what it could mean for UK employers.

Why Are Employers Calling for National Insurance Relief?

For many UK businesses, the cost of employing staff has become a growing concern. Beyond wages, Employer National Insurance adds another expense, particularly for businesses operating on tight margins.

The pressure intensified following the April 2025 changes, which increased the employer NI rate and lowered the threshold at which contributions become payable. Business organisations argue that these higher costs have made employers more cautious about recruitment.

On 13 October 2026, senior retail and hospitality representatives called for measures to reduce the cost of employing younger workers during discussions with the Chancellor. They warned that rising employment costs were discouraging businesses from creating entry-level opportunities.

Source: The Guardian – UK high street bosses urge Chancellor to cut the cost of employing young people.

How Much Employer National Insurance Are Businesses Paying in 2026?

Since April 2025, the standard employer National Insurance rate has increased from 13.8% to 15%, while the annual secondary threshold has fallen from £9,100 to £5,000.

These rules remain applicable in the 2026/27 tax year.

Source: HMRC – Rates and thresholds for employers 2026 to 2027.

The lower threshold means employers generally pay NI on a larger proportion of employees’ earnings. Businesses employing several part-time workers may particularly notice the difference.

For example, an employee earning £20,000 annually would normally generate £2,250 in employer NI under the current standard rules, before available reliefs. Under the previous rules, the equivalent annual liability would have been £1,504.20.

That’s an additional £745.80 per employee annually. For a business with ten employees earning the same salary, the additional cost could reach £7,458 before Employment Allowance or other reliefs.

Wondering how much National Insurance your business pays on employee salaries? Use our free Salary Calculator to estimate employer NI costs and better understand the overall cost of employing staff.

What Employer National Insurance Changes Are Being Proposed?

The CBI is calling for the annual employer NI secondary threshold to increase from £5,000 to £6,000.

The proposal would allow businesses to pay National Insurance on a smaller proportion of employees’ earnings. The CBI estimates that the change could support approximately 41,000 jobs, although this is a projection rather than a guaranteed outcome.

Other business representatives are seeking targeted relief for employers recruiting younger workers, particularly in sectors with significant entry-level employment.

However, these remain proposals. No reduction in the standard employer NI rate or increase in the general secondary threshold has been confirmed.

Source: CBI – Autumn Budget Submission, October 2026.

Could National Insurance Cuts Make Hiring Young Workers Easier?

Businesses in hospitality and retail are among those calling for changes that could make recruiting younger employees more affordable.

Existing rules already provide some support. Employers generally pay 0% secondary Class 1 National Insurance on earnings up to £50,270 annually for employees under 21 and qualifying apprentices under 25.

Source: HMRC – Employer National Insurance rates and thresholds.

Business groups have called for wider relief, including support for workers aged 21 to 24 who do not qualify for the general under-21 exemption. However, the government has rejected proposals to extend the existing under-21 exemption to all employees under 25.

Source: Financial Times – Government response to calls for youth employment NI relief.

For employers, this makes it important to check that existing exemptions are correctly reflected in their payroll.

How Much Could Employers Save if the NI Threshold Increases?

If the government adopts the CBI’s proposed £6,000 threshold while retaining the 15% rate, businesses could save up to £150 annually per employee under the standard employer NI calculation.

Illustrative calculations assume employees earn at least £6,000 annually and are subject to the standard 15% employer NI rate throughout the year. Actual savings depend on pay periods, existing reliefs and individual circumstances.

Businesses whose employer NI liabilities are already fully covered by Employment Allowance may not receive additional cash savings from the proposed threshold increase.

What National Insurance Relief Can Employers Claim Right Now?

While businesses wait for the Budget, existing reliefs could already help reduce their employer NI costs. The Employment Allowance allows eligible employers to reduce their annual employer Class 1 National Insurance liability by up to £10,500 in 2026/27.

However, eligibility conditions apply. For example, a limited company cannot normally claim if it has only one director who is also the only employee generating a secondary Class 1 NI liability. Employers should also check whether eligible younger employees and apprentices are receiving the correct NI treatment.

Source: HMRC – Employment Allowance eligibility.

A review of existing payroll arrangements could help identify whether available reliefs are being used correctly. Our payroll services can help businesses understand their employer NI obligations and manage their payroll more effectively.

Will the October Budget Deliver Employer National Insurance Relief?

The Autumn Budget on 28 October 2026 will reveal whether the government intends to respond to business groups’ demands. The CBI and other business representatives argue that reducing employment costs could support recruitment. The government must also consider how any reduction would affect public finances.

As of 16 October 2026, no new reduction in the standard employer NI rate or increase in the general secondary threshold has been announced. Businesses should therefore continue calculating employer NI under the current rules unless official changes are introduced.

What Should Employers Do Before the Budget?

Rather than waiting for possible tax changes, employers can take practical steps to review their existing payroll costs.

• Review NI calculations: Ensure the correct contribution rates and thresholds are being applied.
• Check Employment Allowance eligibility: Confirm whether your business qualifies and has claimed the available relief.
• Review employee NI categories: Check that eligible younger employees and apprentices receive the appropriate treatment.
• Assess recruitment costs: Calculate the full employment cost before hiring additional staff.

Businesses considering changes to their payroll arrangements may also benefit from understanding whether payroll outsourcing or automation is suitable for their operations.

Could Your Business Be Paying More Employer NI Than Necessary?

The growing pressure to reduce Employer National Insurance reflects a concern shared by many UK businesses. Employment costs are rising, and employers are looking for ways to manage the financial burden without holding back their growth plans.

Whether the October Budget introduces new relief remains uncertain. But while employers wait for possible changes, they could already be overlooking allowances and exemptions that may help reduce their National Insurance costs.

Why wait for a possible tax cut when your business might already qualify for relief?

Understanding what your business is entitled to could make a meaningful difference to your payroll costs. If you’re unsure whether you’re making the most of the available reliefs, Artifin Accountants can help you review your position and explore opportunities to manage your Employer National Insurance more effectively.

This article reflects information available on 16 October 2026. The proposals discussed are not confirmed changes to UK tax law. Employers should refer to the latest HMRC guidance and official Budget announcements before changing their payroll arrangements.