April 2025 is shaping up to be a pivotal month for UK businesses and employees, with significant changes coming to National Insurance, statutory pay and minimum wage. If you’re an employer, you’ll want to pay close attention to NICs thresholds and rates, which could impact your outgoings. For employees, there’s good news, with increases to statutory pay and the National Living Wage, designed to ease the pinch of rising living costs.
Lead Compliance Officer, Kamakshi Mathur, has pulled together everything you need to know below!
National Insurance Contributions (NICs)
The payment threshold for employer NICs will decrease from £9,100 to £5,000, with the contribution rate increasing to 15%.
From April 2025, there will be significant updates to employers’ National Insurance (NI) contributions. Firstly, the contribution rate will increase from 13.8% to 15%. Second, the payment threshold will decrease from £9,100 to £5,000, meaning employers will pay NI at 15% for salaries above £5,000
These changes represent a substantial increase in the tax burden for employers. For instance, businesses may experience a 60% rise in their NICs obligations, due to the combined effect of the lower threshold and higher contribution rate.
The retail sector has voiced concerns about the cumulative financial impact, with major retailers – including Tesco and Greggs – highlighting that these tax increases, coupled with other policies, could add billions in costs and potentially jeopardise jobs in the industry.
Employment Allowance increase
The employment allowance, which offsets employer NICs for eligible businesses will rise from £5,000 to £10,500. This means small businesses can reduce their National Insurance liability by a larger amount – hopefully helping to cushion the blow of the higher contribution rate and lower threshold.
Statutory pay rates
Statutory maternity, paternity, adoption, shared parental leave and parental bereavement pay will increase from £184.30 per week to £187.18 per week.
Effective from 6 April 2025, the UK’s Statutory Sick Pay (SSP) will increase from £116.75 to £118.75 per week, up from the previous threshold of £123. These adjustments aim to provide better financial support to workers during periods of illness.
In addition, the government has announced reforms to extend SSP eligibility to approximately one million low-paid workers. Under the new scheme, these workers will receive either 80% of their average weekly earnings or the standard SSP rate of £118.75 – whichever is lower. This initiative is expected to make some of the lowest earners up to £100 better off each week.
National Living Wage and National Minimum Wage increases
Starting from 1 April 2025, the UK’s National Living Wage (NLW) and National Minimum Wage (NMW) will increase to support workers amid rising living costs.
The NLW for individuals aged 21 and above will rise to £12.21 per hour, a 6.7% increase from the previous rate. For 18 to 20-year olds, the NMW will increase by 16.3% to £10 per hour. Additionally, the rate for 16 to 17-year-olds and apprentices will see an 18% rise to £7.55 per hour. These adjustments aim to ensure fair compensation across all age groups.
What does this mean for UK businesses and their employees?
These upcoming changes present a complex picture. While businesses face a potential increase in costs due to changes in National Insurance – particularly areas like retail – the rise in Employment Allowance offers some relief to smaller firms.
On the employee side, the increases in statutory pay and the National Living Wage are a positive step towards supporting those struggling with the cost of living.
To approach these changes successfully, businesses are reviewing their payroll processes and forecasts. Employees, meanwhile, should familiarise themselves with the new pay rates and entitlements.
Staying informed and proactive will be crucial during this process! If you have any questions about these changes, the Venquis Candidate Care team is here to support you, please reach out today:
kmathur@venquis.com
