For businesses already struggling to balance the books with rising costs and falling consumer confidence, the recent increase in employer National Insurance Contributions (NICs) may prove to be a step too far.
From April 2025, businesses now face a higher rate of NICs when employing staff. First unveiled in the 2024 Budget, the employer National Insurance rate has jumped by 1.2 percentage points going from 13.8% up to 15%. Additionally, the earnings threshold at which contributions begin has dropped significantly, from £9,100 to just £5,000. This means that employers now need to start paying employer NICs when employing anyone who earns over £5,000.
These changes will result in higher employment costs across the board, money which those running limited companies already under pressure, will need to absorb somehow.
For many, these added costs may lead to delayed hiring plans or, in some cases, passing the cost onto customers through price increases, however, these decisions could see them becoming uncompetitive at a time where every sale matters.
Concerned about the National Insurance increase?
For the 2024-25 tax year, the rate of employer National Insurance increases from 13.8% to 15% adding yet more pressure onto already squeezed cash flows. If you are worried about the impact this could have on your company’s finances, talk to the experts at UK Liquidators. As licensed insolvency practitioners we can explain your options and help you plot a way forward. Call today on 0800 063 9262.
If your company is already facing financial challenges, the added tax liability could worsen the situation. For businesses with severe cash flow issues or increasing debts, this National Insurance rise could threaten the prospect of insolvency.
If you believe your company is at risk of becoming insolvent – or if you think it may already be insolvent – it is crucial to act swiftly. Seeking advice from a licensed insolvency practitioner at the earliest signs of financial distress can help you understand your options and prevent the problems from getting even worse.
Liquidation Portal
For Company Directors
Although the situation may feel overwhelming, the good news is that there are a number of insolvency procedures that are designed to help businesses struggling to cope with their rising tax and HMRC obligations.
For some businesses, the National Insurance increase may be the final straw in an already unmanageable financial position. If the company cannot be saved, opting to voluntarily close the business through a Creditors’ Voluntary Liquidation (CVL) may be the most appropriate course of action.
A CVL involves winding up the company, selling its assets, and distributing the proceeds to creditors. Any remaining unsecured debt is written off as part of the process, unless the director has given personal guarantees. Once the liquidation is complete, the company’s name is removed from the Companies House register and ceases to exist.
Start your online liquidation today
If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.
If your business is under pressure from the rise in National Insurance Contributions, the expert team at UK Liquidators are here to support you.
Our licensed insolvency practitioners will alongside you to help you understand your situation while explaining the range of business recovery and closure options available. Contact the team today for free immediate help and advice.
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If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.
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