Employer NICs and the Cost of Your Business Premises: How They Connect

When the government raises employer National Insurance Contributions, it is not directly a property tax. But for a small or medium-sized business, it changes the total cost of running from a premises in ways that should affect how you think about your lease.

What happened in April 2026

Employer NICs rose to 15% from April 2026, with the secondary threshold — the salary level at which contributions begin — reduced from £9,100 to £5,000. This significantly increased the NIC cost for businesses employing part-time, lower-paid, or multiple staff. For a business employing ten people at average wages, the increase added thousands of pounds to annual costs.

The Employment Allowance, which allows eligible businesses to reduce their NIC bill by up to £10,500 per year, was also extended — but the net effect for many employers was still a meaningful increase in employment costs.

The Budget might go further

There is speculation the Autumn Budget could increase the employer NIC rate further, reduce the Employment Allowance, or make other changes to employment taxation. For businesses already operating on thin margins, this would intensify existing cost pressure.

What this has to do with your premises

The connection between employment costs and property costs is a simple one: every pound more you spend on employment is a pound less available for rent, rates, and occupancy costs.

For a business facing higher NIC costs, the question becomes: is your current premises earning its rent? This is the right moment to ask whether the space you occupy — its size, specification, and cost — is correctly calibrated to your actual operational needs.

Specifically:

Do you still need all your space? If hybrid and flexible working means desks are empty for most of the week, you may be paying for space you are not using. A smaller, better-specified premises could reduce total occupancy cost while improving the working environment.

Is your lease up for renewal? A lease renewal negotiation is a direct opportunity to reduce the rent you pay. In 2026, with landlords facing their own refinancing pressure, the negotiating environment for tenants is better than it has been for some time. Do not simply accept a renewal at the passing rent.

Could you sublet or assign part of your space? If you have surplus space and your lease permits it, subletting generates income that offsets your occupancy cost. This requires landlord consent and careful management, but it can materially improve your cost position.

Is secondary space an option? Grade A office or premium retail commands the highest rents. If your operation does not require the specification you are currently paying for, a move to good-quality secondary space could significantly reduce your monthly outgoings — with the employment cost savings funding the transition.

RE:match makes it straightforward to find commercial space that fits your revised cost requirements. Post a brief describing what you need — including your budget — and receive direct responses from landlords and agents with matching space. Start at rematch.co.uk.