Guidance

National Insurance contributions (NICs) grant methodology: April 2025 to March 2026

Published 18 March 2025

Applies to England

1. Introduction

This document sets out the methodology for the National Insurance contributions (NICs) grant. This includes guidance on how we will allocate funding for the 12 month period April 2025 to March 2026.  

We are providing schools and high needs settings with over £930 million in financial year 2025 to 2026 to support them with their increased NICs costs. We are also providing £25 million in respect of schools with early years provision and £155 million for post-16 schools and academies and further education colleges. Taken together, this is an increase of over £1 billion in financial year 2025 to 2026.  

The funding provided through the grant will be to support settings with NICs costs relating to both teachers and support staff, as they are both affected by the increase to NICs.

This funding is being split between mainstream schools, special schools and alternative provision (AP), local authority centrally employed teachers (CETs) (including support staff), early years (EY) settings, and post-16 settings. The split reflects relative pupil and place numbers, and core funding amounts, across these different types of provision.  

This guide explains how we will allocate the funding for mainstream schools (for the 5 to 16-year-old age range), CETs and EY settings in 2025 to 2026. The funding for mainstream schools, CETs and EY will be allocated through a new  NICs grant.   

In advance of the allocations being published, schools can use a calculator tool to estimate their funding for 5 to 16-year-olds through the NICs grant.

The NICs funding for specialist high needs settings, including AP, is being allocated through the core schools budget grant (CSBG) for 2025 to 2026.. We have published details on the funding methodology for these settings.

Funding in respect of post-16 provision will be distributed through the post-16 NICs grant. We have published details on the funding methodology for post-16 settings.

2. Eligibility for the grant

2.1  Mainstream schools (for 5 to 16-year-olds) 

The NICs grant  will provide additional funding in respect of the 5 to 16-year-old age range for the following mainstream school providers:  

• primary and secondary maintained schools  

• primary and secondary academies and free schools  

• all-through maintained schools  

• all-through academies  

• city technology colleges  

• special education resource provision units attached to mainstream schools

2.1.1  Special education resource provision units 

The NICs grant will provide additional funding for mainstream schools with special units or resource provision (SURPs). Mainstream schools with SURPs will receive an allocation calculated on the basis of a flat rate per place, on top of the allocation that all mainstream schools receive.

2.2  Early years settings 

The NICs grant  will provide additional funding in respect of early years provision for the following EY settings:  

• schools (both maintained and academies) 

• governor-run academies and maintained nursery schools 

• all other maintained nursery schools 

2.3 Centrally employed staff (CETs)

The NICs grant  will provide additional funding in respect of local authority CETs and support staff for local authorities.  

Dependent on local definitions, it may cover the following teachers and support staff:   

• peripatetic teachers, including music teachers and support staff employed by the local authority that are part of the music hub partnership, home tutors, and teachers who are employed by education authorities to provide education in institutions other than schools (for example, hospitals, home tuition, assessment centres and pupil referral units)

The DfE is working with Arts Council England separately to support the increase to NICs for non-local authority employer organisations that are hub lead organisations, consortium members or delivery partners within music hub partnerships.  

Funding for CETs who work in adult education will be provided through the post-16 NICs grant.

3. Paying the grant 

In 2025 to 2026 we will pay  the  NICs grant for the period April 2025 to March 2026.  

3.1  Mainstream schools (for 5 to 16-year-olds) 

We will pay funding:  

• for maintained mainstream schools to local authorities, and they will be required to pay it to their individual maintained schools at the published rates  

• at the published rates directly to mainstream academies  

We will pay the grant in:  

• September 2025 for local authorities  

• October 2025 for academies   

These payments will include the main allocation of the mainstream schools element of the grant to cover the 2025 to 2026 financial year, and an initial allocation of SURPs funding for the period April to August 2025, based on the 2024 to 2025 academic year place numbers.  

A further payment will be made in: 

• March 2026 for (1) the SURPs element of funding, covering the period September 2025 to March 2026 (based on the 2025 to 2026 academic year place numbers), and (2) for new and growing schools as explained in the new and growing schools section  

The funding for mainstream primary, secondary and all-through schools will be incorporated into core budget allocations for 2026 to 2027, by being rolled into the schools block of the schools national funding formula (NFF) for 2026 to 2027.  

We will ensure that the usual arrangements are in place for academies, to cover the NICs increase for the period April to August 2026, given their funding cycle follows the academic year. This payment will cover the period before we move the grant into academies’ core budget allocations through the NFF. The funding rates for this April to August portion of the NICs for academies will be five-twelfths of the April to March funding rates below. 

We will decide in due course how the SURPs element of this funding will continue in 2026 to 2027.  

3.2  Centrally employed teachers (CETs)

The NICs grant will provide funding to local authorities in respect of teachers and support staff categorised as centrally employed on the schools workforce census 2024.   

We will pay the grant to local authorities in September 2025.  

Local authorities will receive 1 payment to cover the 2025 to 2026 financial year. 

The funding for CETs will be incorporated into core budget allocations for 2026 to 2027, by being rolled into the central schools services block (CSSB) for 2026 to 2027.  

3.3  Early years settings

The early years NICs grant funding will be paid to local authorities who will then be required to distribute this funding to eligible early years settings in their area. We have published a rate per part-time equivalent (PTE) per age cohort for each local authority who will be required to pass-through this funding in full to eligible early years settings based on local PTE data. 

We expect all local authorities to notify eligible early years providers in their area of their NICs rates ahead of the 2025 to 2026 financial year to help with local business planning.

We will pay the grant to local authorities in September 2025. This payment is separate to the entitlements funding rates announced in December 2024 and as such local authorities are not expected to amend their local funding formulae. 

Local authorities will receive 1 payment to cover the 2025 to 2026 financial year.

4. Funding rates 

4.1  Mainstream schools (for 5 to 16-year-olds) 

We have based the NICs grant funding rates on factors used in previous pay and pensions grants:  

• a basic per-pupil rate with different rates for primary, key stage 3, and key stage 4   

• a lump sum paid to all schools, regardless of pupil numbers  

• a per-pupil rate for pupils who are recorded as having been eligible for free school meals at any point in the last 6 years (FSM6), with different rates for primary and secondary pupils  

In addition, there is a flat rate per place rate for places in mainstream school SURPs. 

We apply an  area cost adjustment (ACA ) to the funding rates in table 1 because of geographical variation in labour costs. We have used the same ACAs as the schools NFF for 2025 to 2026 as published in the  area cost adjustment for national funding formula: technical note.  

We will multiply the base funding rates in table 1 by the relevant  ACA  to calculate the school level allocations.  

4.2  Table 1

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, we will ensure that the usual arrangements are in place to cover the NICs grant for the period April to August 2026. 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 SURPs  

• a flat rate of £167 per place for the September 2025 to March 2026 places in SURPs

4.3  Centrally employed teachers (CETs)

Teachers and support staff categorised as centrally employed on the schools workforce census 2024 will be funded on a per-teacher basis.  

We will calculate allocations for local authority  CETs  by taking the number of teachers categorised as centrally employed on the schools workforce census 2024, and divide the total quantum assigned to fund  CETs  proportionally. This will lead to a ‘per-teacher’ rate.  

We will use the same methodology to distribute funding for centrally employed support staff.  

We do not yet have access to the schools workforce census data for 2024. This is due to be published in summer 2025, following which, we will confirm the ‘per-teacher’ funding rate for both CETs and centrally employed support staff.  

We apply an  ACA  to the funding rate because of geographical variation in labour costs. We will use the same ACAs as for the  CSSB for 2025 to 2026 as published in the area cost adjustment for national funding formula: technical note.

4.4  Early years settings 

For the EY NICs grant, the approach to distribution of funding has been developed in line with previous grants. As with both the early years core entitlements funding and previous early years grants, NICs funding will be distributed at local authority level. 

There will be a separate national base rate per PTE for each age group: under 2s, 2-year-olds, and 3-and-4-year-olds. The total NICs grant funding available for each age group is calculated in the following way:

• First, we derive a notional funding total for each age group using the PTE data described in section 5.3 and the relevant 2025 to 2026 DSG average hourly funding rates
• Next, we calculate the percentage of the total notional funding calculated above for each age group
• Finally, the total early years NICs grant funding is then apportioned by these percentages to derive the total funding available for each age group

The national base rate per PTE for each age group are then derived by dividing the total funding for each age group by ACA weighted PTEs for the age group.

These national base rates are as follows ^{[footnote 1]}: 

• £58 for 3 to 4-year-olds 

• £81 for 2-year-olds 

• £106 for under 2s 

For this grant, we have used the schools ACA rather than the EY ACA. The EY ACA is influenced by private, voluntary and independent (PVI) providers premises related costs, whereas this grant provides additional funding to school-based settings only. Full detail of the schools ACA is available in the technical note. We have used a slightly modified version of the schools ACA that is detailed in the technical note, that is we have calculated a single ACA measure for part fringe local authorities, to align with the local authority level funding approach for the EY NICs grant.  

The national base rates will be multiplied by the ACA to provide each local authority their own rate per PTE per entitlement, and these local authority rates will then be used in the subsequent allocations. The tables detailing the early years NICs rates for each local authority can be found on GOV.UK.

5. Allocations

5.1  Mainstream schools (for 5 to 16-year-olds) 

In May 2025 we expect to publish the conditions of grant and school level allocations showing the total funding allocated for 2025 to 2026 financial year – although for mainstream schools with eligible SURPs the funding will be based initially on the 2024 to 2025 academic year place numbers.

We will calculate allocations by multiplying the relevant funding rates by the pupil count, and FSM6 pupil count, using data from the October 2024 census. The allocations also include the lump sum amount.  

For the initial allocations for SURPs to be published in May 2025, we will multiply the April to August 2025 funding rates for mainstream schools with eligible SURPs, by the place numbers for the 2024 to 2025 academic year. For maintained schools those place numbers will be taken from the 2024 to 2025 financial year section 251 budget returns from local authorities, published in September 2024. The place numbers for academies will be the equivalent 2024 to 2025 academic year numbers.

For mainstream schools with eligible SURPs we will update the allocations for the period September 2025 to March 2026, in February 2026, using 2025 to 2026 academic year place numbers multiplied by the September to March per place funding rate as above. The place numbers for maintained schools will be taken from the 2025 to 2026 financial year section 251 budget returns from local authorities, which are due to be published in September 2025^{[footnote 2]}.

In addition, this allocation will include any increase in place numbers for maintained schools recorded for April to August 2025 (as recorded on the 2025 to 2026 section 251 returns), compared to the September 2024 to March 2025 place numbers (as recorded on the 2025 to 2025 section 251 returns). Any such additional places will be multiplied by the funding rate for April to August 2025, as above. This adjustment ensures that, for example, SURPs that open or expand from April 2025 will receive a correct full year’s allocation for 2025 to 2026. 

The place numbers for academies will be the equivalent 2025 to 2026 academic year numbers, which are due to be published in November 2025.

We will calculate the initial allocations based on the school estate in May 2025. We will use different pupil data for new and growing mainstream schools as explained in the new and growing schools section.  

We will pro rata allocations for schools which are closing in the 2025 to 2026 financial year for the proportion of the remainder of the year that they are open.  

5.2  Centrally employed teachers (CETs)

We expect to publish the local authority allocations for 2025 to 2026 for  their CETs in summer 2025, following the publication of the most recent schools workforce census.

5.3  Early years settings 

We expect to publish in May 2025 the conditions of grant and local authority level allocations showing the total funding allocated for the 2025 to 2026 financial year. 

These allocations will be determined using the same PTE data sources used to develop the national base rates and local authority level rates referenced in section 4.4. 

The PTE data sources are as follows:

Data	Source
3 to 4-year-old (universal and add. hours)	January 2024 schools census, January 2024 early year census - governor-run settings only
2-year-old FRAS (families receiving additional support - formerly referred to as the ‘2-year-old disadvantaged’ entitlement)	January 2024 schools census, January 2024 early year census - governor-run settings only
2-year-old working parent	autumn 2024 schools census
Under 2s working parent	autumn 2024 schools census

6. New and growing schools 

6.1  Mainstream schools that have opened in the past 7 years and are still adding year groups in the 2025 to 2026 academic year 

We will fund these schools based on their pupil numbers in the October 2025 census and so will confirm allocations in February 2026.  

To help these schools with budget planning, we will publish indicative school level allocations in May 2025 (alongside the actual allocations for other mainstream schools), using pupil data from their local authority’s 2025 to 2026 authority proforma tool (APT). The actual February 2026 allocations for these schools will be different because they will use more recent pupil data.  

6.2  Mainstream schools opening in September 2025 

For mainstream schools that open in September 2025, we will confirm NICs grant allocations in February 2026. We will calculate their allocations using pupil number data from the October 2025 census and pro rata funding rates.  

We will not publish indicative funding allocations for these schools. School leaders can estimate their funding levels using the published per pupil funding rates.

7. Contact us 

If you have any questions after reading this guidance, please contact us via our  customer help portal

1. The base rates used in the calculation of local authority level rates are unrounded but are presented here rounded to the nearest pound. ↩

2. Local authorities are required by regulations to set their maintained schools budgets, including the place funding for SURPs in mainstream schools, by 28 February, and compliance with this deadline will enable authorities to include the correct place number for each school for the period September 2025 to March 2026 in their section 251 return due at the end of April 2025. Very exceptionally, if the place number for the next academic year is not confirmed until later, the local authority can ask DfE to correct the number for a school, so long as the correction is submitted by the end of July 2025. ↩