The Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran's Relief) Regulations 2025

Published: Fri 7th Mar 25 Came into force: Sun 6th Apr 25

Department: HM Treasury
Made under: Social Security Contributions and Benefits Act 1992, Social Security Contributions and Benefits (Northern Ireland) Act 1992, Social Security Administration Act 1992, Social Security Administration (Northern Ireland) Act 1992, Social Security Act 1993, National Insurance Contributions Act 2022

The 2025 regulations amended National Insurance contribution rates, thresholds, and National Insurance Fund payments, and extended veteran's relief.

These regulations, effective April 6, 2025, adjust National Insurance contribution rates and thresholds for Class 2 and Class 3 contributions.

They also adjust the prescribed percentage of estimated benefit expenditure for payments into the National Insurance Fund for Great Britain and Northern Ireland, and extend zero-rate contributions for armed forces veterans to the 2025-26 tax year.

The changes are based on a Treasury review of earnings and estimated benefit expenditure.

Arguments For

Intended Benefits: Adjustments to National Insurance contribution rates, limits, and thresholds and payments into the National Insurance Fund ensure the long-term financial sustainability of the social security system and align with government fiscal policy.
Evidence Cited: The regulations cite various acts and orders, indicating a basis in existing legislation and established procedures.
Implementation Methods: The regulations directly amend existing acts and regulations, providing clear instructions on the changes to be made.
Legal/Historical Basis: The regulations are rooted in the existing framework of social security legislation. They are made under the powers conferred by several Acts of Parliament, indicating legal legitimacy and adherence to established processes.

Arguments Against

Potential Impacts: Changes to National Insurance contributions could affect the disposable income of individuals and businesses, potentially impacting consumer spending and economic growth.
Implementation Challenges: Ensuring accurate and timely implementation of the changes across various systems and organizations could present administrative challenges.
Alternative Approaches: Other mechanisms for ensuring the financial stability of the National Insurance Fund could have been considered. These could involve broader tax reform or alterations to benefit payment levels.
Unintended Effects: The changes may have unforeseen consequences on specific groups of individuals or sectors of the economy, requiring ongoing monitoring and evaluation.

Part 1General

Citation and commencement1.

These Regulations may be cited as the Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran's Relief) Regulations 2025 and come into force on 6th April 2025.

This section states the official title of the regulations as the "Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran's Relief) Regulations 2025" and sets their effective date as April 6th, 2025.

Part 2Rates, limits and thresholds for National Insurance Contributions

Interpretation2.

In this Part—

“the Act” means the Social Security Contributions and Benefits Act 1992;

“the Northern Ireland Act” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

This section defines terms used throughout Part 2. "The Act" refers to the Social Security Contributions and Benefits Act 1992, and "The Northern Ireland Act" refers to the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

These abbreviations simplify references to the primary legislation being amended.

Rate of and small profits threshold for Class 2 contributions3.

In section 11 of the Act15 and the Northern Ireland Act16 (Class 2 contributions)—

(a)

in subsection (4) for “£6,725” substitute “£6,845”;

(b)

in subsection (6) for “£3.45” substitute “£3.50”.

This regulation amends section 11 of the 1992 Acts concerning Class 2 National Insurance Contributions (NICs) paid by the self-employed.

It increases the small profits threshold from £6,725 to £6,845 (subsection (a)) and raises the weekly contribution rate from £3.45 to £3.50 (subsection (b)).

Amount of a Class 3 contribution4.

In section 13(1) of the Act17 and the Northern Ireland Act18 (Class 3 contributions) for “£17.45” substitute “£17.75”.

This regulation amends section 13(1) of the 1992 Acts.

It increases the rate of voluntary Class 3 NICs from £17.45 to £17.75.

Class 3 contributions are made by individuals who did not pay sufficient Class 1 contributions to qualify for a state pension.

Amendment to the Social Security (Contributions) Regulations 20015.

(1)

The Social Security (Contributions) Regulations 200119 are amended as follows.

(2)

In regulation 1020 (earnings limits and thresholds)—

(a)

for “2024” substitute “2025”;

(b)

in paragraph (a) for “£123” substitute “£125”.

This regulation amends the Social Security (Contributions) Regulations 2001.

It updates the year reference in regulation 10 from 2024 to 2025 and increases the lower earnings limit from £123 to £125.

The lower earnings limit is a key factor in determining eligibility for certain state benefits.

Amendment to the National Insurance Contributions Act 20226.

(1)

The National Insurance Contributions Act 2022 is amended as follows.

(2)

In section 6(4)21 (zero-rate contributions for armed forces veterans)—

(a)

in paragraph (b) for “2023-24.” substitute “2023-24;”;

(b)

in paragraph (c) for “2024-25.” substitute “2024-25;”;

(c)

after paragraph (c) insert—

“(d)

2025-26.”.

(3)

In sections 8(1) and (2)22 (upper secondary threshold for earnings: special tax site employees and armed forces veterans) for “and 6 April 2024” substitute “, 6 April 2024 and 6 April 2025”.

This regulation amends the National Insurance Contributions Act 2022.

It extends the zero-rate contributions for armed forces veterans to include the 2025-26 tax year (section 6) and updates section 8 to include April 6, 2025, in the upper secondary earnings threshold for special tax site employees and armed forces veterans.

Part 3National Insurance Funds

Prescribed percentage of estimated benefit expenditure - Great Britain7.

Section 2(2) of the Social Security Act 199323 (payments into National Insurance Fund out of money provided by Parliament) has effect with respect to the tax year 2025-26 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31st March in that tax year shall be 5 per cent.

Prescribed percentage of estimated benefit expenditure - Northern Ireland8.

Article 4(3) of the Social Security (Northern Ireland) Order 199324 (payments into National Insurance Fund out of appropriated money) has effect with respect to the tax year 2025-26 and the prescribed percentage of estimated benefit expenditure for the financial year ending with 31st March in that tax year shall be 5 per cent.

These regulations specify the prescribed percentage of estimated benefit expenditure to be paid into the National Insurance Fund for the 2025-26 tax year.

Regulation 7 sets this at 5% for Great Britain, and Regulation 8 sets it at 5% for Northern Ireland.

These payments are made from government funds.

Explanatory Memorandum PDF View Source

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