National Insurance Bill 2025: What You Need to Know

The National Insurance Contributions (Secondary Class 1 Contributions) Bill, introduced as part of the UK Government’s 2025–26 budget, proposes a rise in employer National Insurance rates, effective April 2025. The bill aims to raise additional revenue, but it has been met with strong opposition from sectors already under financial pressure, particularly the social care sector.

Key highlights:

• Effective Date: April 2025
• Who Pays More: Employers across most sectors
• Who Is Exempt: NHS organisations (currently confirmed)
• Pending Exemptions: The House of Lords has voted in favour of exempting social care providers, but this still requires House of Commons approval

If enacted, the exemption for care providers could ease financial pressure, enabling reinvestment into operational and legal support functions.

Who is exempt from the NI increase?

Employers outside these categories—including many private healthcare providers—remain liable for the increase unless further amendments are introduced.

Care Sector Relief: Lords Vote to Exempt Social Care Providers from National Insurance Increase

The House of Lords has voted in favour of an amendment to the National Insurance Contributions (Secondary Class 1 Contributions) Bill (“the Bill”), which would exempt social care providers, including care homes and hospices, from the rise in employers’ National Insurance contributions. This amendment aims to reduce the financial burden on care providers. Leaders in the sector, such as Care England and the Independent Care Group, have expressed hope that the government will adopt this exemption moving forward.

Financial relief on the horizon for care providers

The Bill, introduced in the Government’s 2025-26 budget, proposed an increase in National Insurance paid by employers, set to take effect in April 2025. Whilst the NHS was exempt from the rise, private and charity-run healthcare organisations were not. In response, significant concerns were raised within the care sector, which has already been under financial strain due to rising operational costs and the impact of the COVID-19 pandemic. Many care home operators feared that this added financial burden would further stretch already tight budgets, leaving little room for additional outgoings, including legal expenses.

If the exemption is upheld, it could provide much-needed financial relief for care providers, allowing them to reallocate resources toward areas that may previously have been deemed non-essential, such as legal spend.

Why legal spend is not a luxury

At times of financial strain, operators may look to cut their legal budget. However, it’s essential to view legal support not as a luxury but as a crucial business investment. Care homes are businesses like any other, facing shareholder disputes, contract negotiations, compliance challenges, and the ever-watchful eye of the Care Quality Commission (CQC). Ignoring legal issues or taking a reactive approach can leave operators vulnerable to costly and disruptive disputes.

Investing in legal support proactively is fundamental to maintaining business stability and long-term success. Whether it’s safeguarding against potential disputes by ensuring terms and conditions are fit for purpose, ensuring compliance with evolving regulations, or managing employment and contractual matters, care providers cannot afford to cut corners when it comes to legal advice. The CQC’s focus on quality and safety means that any shortfall in compliance can result in interventions that are far more costly than early legal support would have been.

A strategic opportunity to build legal resilience

The financial relief offered by the National Insurance exemption could help make legal costs more manageable and accessible for care providers. This presents an opportunity to strengthen legal resilience, proactively address potential risks, and put the business in the best possible position to respond to challenges. Now more than ever, legal spend should be viewed as a fundamental part of running a successful care business, not an afterthought.

What’s next?

As the Bill returns to the House of Commons for further consideration, the sector will be watching closely to see if the exemption will be upheld. If passed, it would alleviate some financial pressures care providers face and free up resources to invest in essential legal support. We encourage care providers to take this opportunity to reassess their approach to legal spend, ensuring they are well-prepared to navigate the complexities of operating in a highly regulated sector.