Following the announcement in the 2024 Autum Budget that employer National Insurance Contributions (NICs) were to increase to 15% from April 2025, coupled with a reduction to the threshold at which employers start paying NICs dropping from £9,100 to £5,000, the DfE have now announced how this will be funded for the education sector.
The NICs grant will assist schools with the added financial burden brought about by the increased NICs rates, which affect both teaching staff and support staff. Over £1 billion will be allocated across different educational settings, including mainstream schools, special education units, early years providers and post-16.
The grant will be divided between various school types and local authority roles. Key funding sources include:
- mainstream schools (ages 5-16): Over £930 million allocated to primary, secondary, and all-through academies.
- special schools and alternative provisions: Funded through the core schools budget grant.
- early years settings: £25 million for schools with early years provision.
- post-16 settings: £155 million for further education and post-16 academies and colleges.
Key dates and payments
For the 2025-2026 financial year, payments will be made at the following points:
- September 2025: Local authorities will receive NICs funding to pass on to maintained schools and early years settings.
- October 2025: Direct payments to academies.
- March 2026: Additional payments for special units (SURPs) and adjustments for new or growing schools.
Academies will receive a proportionate payment for the period between April and August 2026 in line with their financial years.
Funding rates
The base funding rates for 2025 to 2026 financial year are:
- a basic per-pupil rate of £78 for primary pupils, including pupils in reception
- a basic per-pupil rate of £68 for key stage 3 pupils
- a basic per-pupil rate of £77 for key stage 4 pupils
- a lump sum of £2400
- a FSM6 per-pupil rate of £75 per eligible primary pupil
- a FSM6 per-pupil rate of £60 per eligible secondary pupil
For academies, the funding rates for this April to August portion of the grant will be five-twelfths of the full-year equivalent of the NICs grant. This means that the funding rates for the April to August payment to mainstream academies will be:
- a basic per-pupil rate of £33 for primary pupils, including pupils in reception
- a basic per-pupil rate of £28 for key stage 3 pupils
- a basic per-pupil rate of £32 for key stage 4 pupils
- a lump sum of £1000
- a FSM6 per-pupil rate of £31 per eligible primary pupil
- a FSM6 per-pupil rate of £25 per eligible secondary pupil
The 2025 to 2026 financial year funding rate for mainstream schools with eligible SURPs is £286 per place, and for the allocation calculations this full year rate has been split into:
- a flat rate of £119 per place for the April to August 2025 places in
- a flat rate of £167 per place for the September 2025 to March 2026 places in SURPs
Special considerations for new and growing schools
New schools that have opened in the past seven years and are still adding year groups will have their funding confirmed based on the October 2025 census. This funding will be published in February 2026, and schools can access an indicative funding allocation in May 2025 to assist with planning.
The next step
If you have any questions regarding the above, please get in touch with Jack Wilkinson or your usual UHY academy adviser.
