Upcoming Changes to Employers NI and Minimum Wage

April 2025 will bring significant changes to both employer national insurance contributions (NICs) and minimum wage rates in the UK. These changes are part of the government’s efforts to address economic challenges and support workers’ living standards.

Employer National Insurance Contributions

Starting from April 6, 2025, the employer NICs rate will increase from 13.8% to 15%. Additionally, the secondary threshold, which is the earnings level at which employers start paying NICs, will be reduced from £9,100 to £5,000 per annum. This means that a larger portion of employees’ salaries will be subject to NICs.

To help small businesses cope with these changes, the Employment Allowance will be increased from £5,000 to £10,500. This allowance can be claimed by eligible businesses to offset their NICs liabilities. The removal of the £100,000 cap on the Employment Allowance means that more businesses will be able to benefit from this relief.

Changes to Minimum Wage

The government has also announced significant increases to the minimum wage rates. The National Living Wage for workers aged 21 and over will rise from £11.44 to £12.21 per hour. This represents a 6.7% increase and is expected to boost the annual income of full-time workers by £1,400.

For younger workers, the National Minimum Wage will also see substantial increases. The rate for 18- to 20-year-olds will rise from £8.60 to £10.00 per hour, a 16% increase. Similarly, the apprenticeship rate will increase from £6.40 to £7.55 per hour.

These changes aim to address age-based wage discrimination and ensure that younger workers receive fair compensation for their work. The government hopes that these wage increases will help workers cope with the rising cost of living and improve their financial stability.

Impact on Businesses and Workers

The combination of increased employer NICs and higher minimum wage rates will have a significant impact on businesses and workers. While the wage increases will provide a much-needed boost to workers’ incomes, businesses will face higher payroll costs. This could lead to increased prices for goods and services, potentially affecting consumer spending and economic growth.

Businesses will need to carefully plan and adjust their budgets to accommodate these changes. Some may need to consider reducing staff hours or increasing prices to offset the higher costs. However, the increased Employment Allowance and other support measures aim to ease the burden on small businesses.

The upcoming changes to employer national insurance and minimum wage in April 2025 represent a significant shift in the UK’s economic landscape. While these changes aim to support workers and address economic challenges, businesses will need to adapt to the new financial realities.