Secondary Threshold (ST)

The Secondary Threshold (ST) is the earnings level above which the employer pays Class 1 secondary National Insurance contributions on each employee's pay. From April 2025 the ST was reduced from £9,100 to £5,000 per year (about £96 per week or £417 per month) and the employer rate was raised from 13.8% to 15%. Both changes remain in force for 2026/27. The combined effect is to expand significantly the slice of low-earner pay on which employers pay NI.

A separate, higher Upper Secondary Threshold (UST) exists for under-21s, apprentices under 25, and Freeport / Investment Zone employees: employer NI is 0% up to the UST (£50,270 for 2026/27, aligned with the UEL) and 15% above it. The Employment Allowance - set at £10,500 from April 2025 - further reduces small employers' Class 1 secondary liability.

Worked example: A bakery has 6 employees on £24,000 a year. Pay above the ST per employee is £24,000 − £5,000 = £19,000. Employer NI per head is 15% × £19,000 = £2,850. Total annual employer NI bill is 6 × £2,850 = £17,100. After applying the £10,500 Employment Allowance, the bakery actually pays £6,600. If the same bakery hired a 19-year-old apprentice on £18,000, the UST applies: employer NI on that hire is zero because £18,000 sits below the £50,270 UST. The ST does not appear on employees' payslips, but it directly drives the cost of hiring - and frequently shapes whether small businesses can afford to take on additional staff.