NICs, ISAs & Pensions in 2025/26: Bigger Costs, Bigger Opportunities

While the government didn’t make many flashy announcements in the Spring Statement, the tax landscape for 2025/26 includes some of the most financially impactful changes in years — particularly for employers, the self-employed, and those saving into pensions or ISAs.

Here’s what you need to know — and why you might end up paying significantly more, or missing key reliefs, if you don’t act early.

Employers Hit Hard: Big Rise in National Insurance Costs from April 2025

From 6 April 2025, the cost of employing staff is going up — and not by a small amount.

What’s changing?

• The employer (secondary) NIC rate is increasing from 13.8% to 15%
• The secondary threshold is dropping from £9,100 to £5,000 per year

This means employers will start paying NICs on lower earnings, and at a higher rate than before.

Example:

Employers must also now file a PAYE submission for employees earning above £5,000, instead of the previous threshold linked to the Lower Earnings Limit (LEL) — which remains at £6,500 per year for benefit entitlement.

These changes come alongside April’s increases to the National Minimum Wage (NMW) and National Living Wage (NLW) — further raising payroll costs for businesses.

Good News: Employment Allowance Doubled to £10,500

To help offset the rise in NIC costs, the Employment Allowance (EA) will increase from £5,000 to £10,500 from April 2025.

That means eligible employers can reduce their Class 1 NIC bill by up to £10,500 per year — potentially wiping out NIC liabilities altogether for small businesses.

Even better:

• The rule that restricted EA to employers with less than £100,000 in NICs in the previous year is being scrapped.
• This opens the door for larger businesses to claim EA for the first time.
• Other restrictions (e.g. single-director companies) still apply, but many more employers will now benefit.

Planning Tip:

You can backdate EA claims for up to 4 previous tax years. If your business didn’t claim it before but was eligible, you may be due a refund.

Class 2 NICs for the Self-Employed: Compulsory Charge Abolished

Previously, self-employed individuals had to pay Class 2 NICs (around £179/year) to qualify for State Pension and other benefits, if their profits exceeded the Small Profits Threshold.

From April 2025:

• If profits are above £6,845, you’ll automatically qualify for benefits without paying Class 2 NICs.
• If profits are below £6,845, you can voluntarily pay Class 2 NICs at £3.50/week to retain State Pension entitlement.

This is significantly cheaper than Class 3 voluntary NICs, which cost £17.75/week.

Who benefits?

• Low-profit sole traders (e.g. part-time freelancers) who still want State Pension protection
• Side-hustlers with small self-employed income
• Those taking a career break or working part-time during parental leave

ISA Allowances: Still Generous – But Still Frozen

The ISA investment limits are unchanged for 2025/26 and will remain frozen until April 2030:

• £20,000 for Adult ISAs
• £4,000 can go into a Lifetime ISA (within the £20k total)
• £9,000 for Junior ISAs or Child Trust Funds

While these limits are still generous, inflation means their real value is shrinking year by year — so maximising your ISA contributions each year is more important than ever.

Tax-saving tip:

Dividends or interest inside an ISA do not count toward your dividend allowance or savings allowance — both of which are now much lower than in the past.

Pensions: No Lifetime Allowance, But Eyes on the Autumn Budget

After scrapping the Lifetime Allowance (LTA) in 2023, many feared the Chancellor would backtrack. So far, that hasn’t happened:

• The Annual Allowance for contributions remains at £60,000
• You can still take a tax-free lump sum of up to £268,275 (unless you have protected rights)
• No LTA tax applies on pension pots above these limits

However, a new Inheritance Tax (IHT) charge is coming in 2027 for unused pensions on death — and pensions are still seen as a potential area for future Budget changes.

For now, pension planning remains a powerful tax shelter, especially for:

• Higher-rate and additional-rate taxpayers
• Business owners looking to extract profits efficiently
• Those approaching retirement or estate planning

What This Means for You

Let Merranti Help You Prepare for 2025/26

These changes offer a mix of risks and opportunities. Failing to prepare could mean:

• Higher tax bills
• Missed reliefs
• Lost pension or benefit entitlements

But with the right strategy, you can:

 Reduce payroll taxes with EA and benefit planning
 Protect your future State Pension with voluntary NICs
 Use ISAs and pensions to shield savings and income
 Get ahead of NIC changes and reporting obligations

Let’s review your payroll, savings and pension strategy — before these changes hit your bottom line.