February 4, 2025
How Upcoming National Insurance Changes Will Impact Your Business Cash Flow
Finance, General News, Lending

As a business owner, staying on top of tax and payroll changes is essential to maintaining a healthy cash flow and managing your finances effectively. We want to ensure you’re aware of some upcoming changes to Employer’s National Insurance (NI) contributions that will take effect in April 2025, and how they could impact your business.
In this blog, we’ll explain what’s changing, when it will take effect, and how these changes could affect your business cash flow. We’ll also provide some suggestions for managing the impact on your finances, including considering additional borrowing.
What’s Changing?
Starting in April 2025, the UK government is implementing the following changes to Employer’s National Insurance contributions:
- Increased Employer NI Contributions
- Employer’s National Insurance rates will rise by 1.25 percentage points. This increase will apply to employees earning above the primary threshold, meaning higher costs for your business in terms of employee contributions.
- Adjustment to Earnings Thresholds
- The earnings threshold for Employer’s National Insurance is dropping from £9,100 to £5,000, potentially bringing more employees into the range where Employer’s NI contributions are due. This means your business could face additional contributions for employees who were previously exempt as well as paying NI on £4,100 more per employee.
- Impact on Statutory Benefits
- Changes to Employer NI could also affect statutory benefits, such as maternity pay, sick pay, and other employee entitlements, potentially increasing costs related to employee leave.
How Will This Impact Your Business Cash Flow?
With these upcoming changes, your business may experience several financial impacts, particularly in terms of cash flow:
- Higher Payroll Costs
- The increase in Employer’s NI contributions will directly lead to higher payroll costs. These additional expenses could strain your cash flow, particularly for businesses with a large number of employees or higher wage bills. You’ll need to ensure you have sufficient liquidity to cover these increased costs.
- Potential Strain on Cash Flow Management
- With multiple contributions, including the rise in Employer NI and changes to employee benefits, your business may face a cash flow squeeze. If these increases are not accounted for in your budget, it could put pressure on your day-to-day finances, especially during busy periods.
- Potential Need for Additional Borrowing
- If your business is already operating on tight margins, these changes could leave you with a gap in your cash flow. To bridge that gap, you may need to consider additional borrowing to manage the higher payroll costs until your cash flow stabilizes. This could include short-term loans, lines of credit, or other forms of business finance that can help cover the increased expenses.
- Increased Administrative Costs
- With the changes to thresholds and contribution rates, your payroll administration costs could rise as well. You may need to invest in updated payroll software or seek professional help, adding another layer of financial consideration.
How Can You Prepare?
Here are a few steps you can take to manage the impact of these changes and ensure your business remains financially stable:
- Review Your Cash Flow Forecasts
- Take a closer look at your current cash flow and factor in the potential rise in payroll costs. This will help you identify whether you’ll need additional funding to cover the increased expenses.
- Consider Additional Borrowing Options
- If you anticipate a cash flow gap, now is a good time to explore additional borrowing options. Short-term loans or lines of credit can provide the working capital needed to cover the rise in Employer NI contributions without disrupting your operations.
- We can help you explore financing options that work best for your business’s needs, offering you flexibility and quick access to funds.
- Update Your Payroll Systems
- Ensure your payroll system is updated to reflect the new contribution rates and thresholds, so you’re not caught off guard when the changes come into effect.
- Communicate with Your Team
- It’s important to inform your employees about the changes to Employer NI, especially if they’re likely to be impacted by adjustments in benefits or payroll calculations.
We’re Here to Help
At Reparo Finance, we understand that changes like these can be challenging, especially when it comes to managing your business finances and cash flow. If you’re considering additional borrowing options to help bridge any cash flow gaps, our Revolving Credit Facility may be the perfect solution.
Simply [contact us] or call us at [0161 521 0870] to discuss how we can support you through these changes and help your business stay financially strong.