How Sole Directors Can Avoid the April 2025 Employer National Insurance Hike - (And Still Pay Yourself £12,570 Legally)
- Dani Gibson
- Apr 7
- 3 min read
From April 6, 2025, Employer National Insurance is getting more expensive for UK limited companies.
If you're a sole director paying yourself a tax efficient salary through your company, this matters to you. But here’s the good news, there’s a completely legal way to avoid paying Employer NI in 2025, and keep your salary at £12,570.
Let’s break it down.
What’s Changing from April 6, 2025?
The UK government is introducing several changes to National Insurance Contributions (NICs) that will impact employers, especially small businesses and sole directors.
Here’s what’s new for the 2025/26 tax year:
🚨 Employer NI rate increases from 13.8% to 15%
🚨 Secondary Threshold (where Employer NI starts) drops from £9,100 → £5,000
✅ Employment Allowance increases from £5,000 → £10,500
What This Means for You
If you're paying yourself £12,570/year (a common director strategy), and don’t qualify for Employment Allowance, your company will owe £570 in Employer NI.
But...
If you do qualify for Employment Allowance, you’ll pay £0 in Employer NI.
The key? You must have another employee who isn't a director.
How to Qualify for Employment Allowance in 2025
To legally claim Employment Allowance (EA), your company needs to:
Employ at least one person who is not a director
Pay them more than the Lower Earnings Limit (currently £123/week)
Run a legitimate payroll through PAYE
Submit the EA claim through your payroll software
The Sole Director Workaround (That HMRC Allows)
Step-by-Step “NI Hack”:
Hire someone to do real, necessary work for your business(Think: Virtual Assistant, admin support, cleaner — even a family member if it's genuine)
Put them on a real employment contract
Pay them at least £123/week
Add them to your company payroll
Submit your EA claim through your payroll software
Once claimed, EA will cover up to £10,500 of Employer NI liability — more than enough to offset your full £12,570 salary.
You’ll also benefit from Corporation Tax relief on that salary. Double win.
Timing Tip: Don’t Miss This
Already ran your April payroll with directors only?
No problem.
If you hire a qualifying employee in May, run payroll with them, and claim EA, it will apply to the entire tax year — including April.
What to Watch Out For
To keep this strategy compliant:
The role must be real (no fake hires)
You must not be the only employee
You can’t claim EA if you’re the only employee and a director
Example Breakdown
Scenario | With EA | Without EA |
Salary | £12,570 | £12,570 |
Employer NI | £0 | ~£570 |
CT Relief on Salary | ✅ | ✅ |
Want to Pay Yourself Tax Efficiently in 2025?
If you're a sole director, you don't have to absorb the increased Employer NI bill. You just need to plan now.
Need help setting up payroll, contracts, or EA claims?
Final Thoughts
This isn’t a loophole, It’s a legitimate, HMRC approved allowance designed to support small businesses.
And in 2025, with the Employer NI rate going up and the threshold dropping, every pound saved matters more than ever.
So if you’re a sole director looking to:
Avoid an extra £570 bill
Maximize your company’s tax efficiency
Stay 100% compliant
👉 Employment Allowance is your friend.
Contact Seacrest Accountancy today on 01841 700108 for all of your tax, accounting and business support needs, based in Cornwall and serving the UK.
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