November 2025 National Insurance
- Ish Mukit
- Dec 1, 2025
- 3 min read
The Autumn Budget delivered a series of National Insurance Changes that will shape payroll, personal tax planning and business decisions over the coming year. These changes affect employees, sole traders and company directors. They will begin to influence pay packets and cashflow from early 2026.
National Insurance is one of the largest tax costs for many individuals. Even a small change in rates or structure can have a noticeable effect on net income. For businesses these adjustments influence payroll forecasting and cashflow planning. November is therefore an important moment to understand the new rules and to prepare before the changes take effect.
National Insurance
The National Insurance changes introduced in the Autumn Budget focus on three areas. These are the employee rate, the self employed Class Four rate and the structure of Class Two contributions.
Employee National Insurance will fall from the current main rate to a lower rate that the government believes will support working households and encourage earnings growth. This will increase net pay for millions of employees. Directors who take a salary from their limited companies will also see this rise in take home pay.
For sole traders the change to Class Four contributions is significant. The main rate of Class Four will reduce. This lowers the overall tax burden on self employed individuals. It also helps those whose income has fluctuated during the year.
The role of Class Two contributions is also being updated. Class Two has historically created a flat weekly charge for the self employed in exchange for access to state benefits. The Budget outlines plans to simplify how entitlement is recorded. This aims to reduce confusion and to create a more modern structure.
These changes will take effect from April 2026. Although this is several months away, November is an ideal time to begin preparing. With Self Assessment deadlines approaching, understanding these new rules helps individuals plan ahead with clarity.
How it impacts you
The new rates influence the income of employees, directors and sole traders in different ways. Employees and directors who take a salary will notice an increase in take home pay once payroll systems update to the new rate. The precise amount will depend on earnings but even a small rise can support household budgets during the early part of the new year.
For sole traders the reduction in Class Four contributions may ease the combined burden of income tax and National Insurance. It also makes profit planning more predictable. Many self employed individuals will welcome this change as it offers some support during a period of higher living costs.
The updated Class Two rules may simplify record keeping for some and will reduce the chance of confusion about state benefit entitlement. Those who currently make manual Class Two payments should pay close attention to the new rules to ensure that their contributions remain accurate.
For limited company directors who pay themselves through a mix of salary and dividends the changes may influence the most efficient balance. A lower National Insurance cost on salary may shift the calculation slightly. Reviewing this balance before April ensures the best approach for the next financial year.
What you can do
Begin by reviewing your expected income for the 2025 to 2026 tax year. If you are employed or take a salary as a director consider how the reduced employee rate will affect your take home pay. This helps with personal budgeting and forecasting.
Sole traders should update their profit projections and estimate their new Class Four liability. Doing this early ensures that tax saving strategies such as pension contributions can be considered with greater accuracy.
Anyone who currently pays Class Two contributions manually should check their HMRC account during the next few months. This will confirm how the new structure will apply in their specific circumstances.
Businesses should make sure that payroll software is ready for the April update. Checking this in advance prevents errors and avoids surprises when running the first payroll of the new tax year. Directors should also discuss with their accountants whether their salary and dividend mix remains optimal under the new rules.
At Ledgr Accountants we work with clients to apply these National Insurance Changes in a practical way. We help you understand how the new rules affect your income and what steps to take before the new rates become active.
Ish Mukit
Senior Accountant
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