Understanding the changes in 2025 national insurance
The government has announced two major changes to employer National Insurance contributions starting 6 April 2025. First, the rate employers pay will increase from 13.8% to 15%—a 9% rise overall. Second, and probably more impactful for hospitality venues, the earnings threshold at which businesses start paying NI will drop significantly from £9,100 to £5,000 per year.
These changes mean you'll not only pay a higher rate on your existing NI-eligible employees, but you also have to pay for employees who previously fell below the threshold. Employee National Insurance rates and thresholds remain unchanged, so this additional cost falls entirely on employers.
To partially offset these increases, the Employment Allowance will rise from £5,000 to £10,500 per year, and the £100,000 employer NI bill restriction will be removed.
How will the increase in national insurance impact your hospitality business
Restaurants, bars and hotels operate differently from most businesses when it comes to staffing, and that's exactly why these NI changes will hit you harder than they will other industries.
The reduction in the Secondary Threshold means you'll now pay NI contributions for employees who previously didn't qualify. Think about your weekend team and students working a few shifts—many will now trigger employer NI for the first time.
For a typical pub or restaurant with part-time employees, each earning £7,000 annually, this change adds hundreds of pounds to your yearly expenses. While that might not seem much at first, when combined with the rate jump from 13.8% to 15%, the overall impact on your wage bill quickly adds up.
The timing couldn't be more challenging, taking place alongside are the April 2025 minimum wage increases. For businesses where labour costs eat up much of the ROI, these changes require serious thought about how you schedule your team.
There is some good news—the new Employment Allowance may ease the burden, especially for smaller venues. Every business will be affected differently, so taking the time to run the numbers for your specific situation is well worth the effort.
Managing national insurance costs through effective workforce planning
The NI changes make it important to go over and understand your labour costs. While you can't avoid these new contributions entirely, the right technology can help you manage their impact. Here's how smart scheduling tools can support your business through these changes:
Automatic validation checks
Running a venue means juggling multiple legislative requirements alongside the new NI changes. Tracking all these obligations manually is time-consuming and prone to errors.
Rotaready's automatic validation checks your rotas against Working Time Regulations and other legal requirements. The system highlights any potential issues before you publish rotas, preventing costly mistakes and giving you confidence that your rotas remain compliant while you focus on adapting to the new NI legislation.
One of our customers, The Pizza Room, faced similar challenges with managing costs and administrative tasks. After switching to Rotaready, they saw an impressive 572% ROI and saved about 20 hours weekly on scheduling and paperwork.
Project Manager Andrea Pitini notes: "Rotaready's Cost Control feature has given us better visibility across our sites so we can ensure that we have the optimal staffing levels while keeping a tight grasp on costs." This visibility becomes even more valuable when managing the additional financial impact of the new NI rates.
Streamlined time and attendance
Accurate tracking of hours worked becomes even more important when NI costs are higher. Manual timesheets often contain errors that lead to unnecessary payments.
Rotaready monitors time and attendance in practical ways:
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Team members can clock in using their phone's GPS location verification, ensuring they're actually at work when they start their shift.
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Venues that prefer a central solution, Rotaready lets employees clock-in via tablet and mobile app.
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The system goes beyond basic timekeeping by flagging attendance issues. Late arrivals, missed shifts or unusual patterns are automatically highlighted for the manager to review.
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When employees work beyond scheduled hours, managers can quickly approve or decline the additional time with a single tap, maintaining control over costs without administrative headaches.
With each hour now carrying a higher NI cost, this precise approach to time tracking helps protect your margins without creating additional work for your managers.
Employee availability management
Creating schedules that minimise unnecessary labour costs requires clear visibility of when employees are available to work. This becomes particularly important when managing part-time employees who may now cross the lower NI threshold.
Rotaready's absence management functionality makes holiday booking fair and transparent. The system calculates holiday entitlements, flags any schedule conflicts and helps managers plan coverage well in advance. Your team can submit and track their requests through the mobile app, and you get a clear view of upcoming leaves for better long-term planning.
Increased retention = lower labour costs
With increasing NI costs, retaining your current employees makes even more sense financially. The cost of recruiting and training new team members now carries additional NI implications. When you do need to bring on new employees, cutting down the paperwork and setup time saves money and headaches.
Rotaready's self-onboarding feature takes the hassle out of the employee onboarding. New team members enter their personal details, bank information, right to work documents and other essentials directly through the mobile app when it suits them. You can check their progress and review what they've submitted at your convenience, saving hours of admin time while keeping everything above board.
The easy-to-use mobile app continues to support employees throughout their employment, giving them control over their schedules, allowing them to see upcoming shifts, submit availability preferences and request time off without chasing managers. This level of transparency and flexibility ranks highly in hospitality worker satisfaction surveys and addresses common reasons for staff turnover. By keeping your experienced team members longer, you reduce the costs associated with recruitment, training and the inevitable productivity gaps during employee transitions, which helps offset some of the new NI expenses.
Consider salary sacrifice options
Salary sacrifice arrangements can help reduce the impact of NI costs for both employers and employees. These schemes allow employees to exchange part of their salary for non-cash benefits, reducing the gross pay on which NI is calculated.
Options like enhanced pension contributions or additional holiday allowance may appeal to employees while reducing your NI bill.
Review your employment structure
The huge reduction in the NI threshold may warrant a review of how you structure your team. Some venues might save money by combining positions or changing shift patterns.
Rotaready's intuitive scheduling interface makes it easy to visualise different staffing scenarios. You can quickly build staff rotas and see their cost implications, helping make informed staffing decisions based on concrete data rather than guesswork.
Flexible staffing
The changes in national insurance might prompt you to reconsider your staffing mix. Some venues are exploring whether a different balance between permanent and casual staff could help manage these increased costs while maintaining service levels.
Rotaready helps you explore these options with confidence. The straightforward scheduling system lets you test different team structures and instantly see their impact on wage costs. You can model scenarios where some work is shifted to casual staff who work fewer hours, keeping them below the £5,000 threshold while ensuring your core team retains their hours.
The key is striking the right balance for both your business and your team. Although adding more casual employees could lower your NI bill, consider whether this outweighs the benefits that experienced team bring to your venue. Your regulars might appreciate familiar faces, and seasoned team members often need less supervision and training.
How Rotaready can help you with managing the changes in national insurance
With hospitality margins already tight, these national insurance changes present yet another financial hurdle to overcome. Throughout this guide, we've shared practical approaches to handle these challenges—from smarter scheduling to precise time tracking—all aimed at keeping your costs in check while supporting your team.
Rotaready provides everything you need to face these changes head-on. Our scheduling tools make every shift count, while features like automatic compliance checks and clear attendance tracking take the hassle out of everyday management.
Want to see how Rotaready can help you navigate these changes more smoothly? Contact us to learn more or request a demo here.