Last year we had the usual Autumn Budget, and it contained significant updates to both the National Minimum Wage (NMW) and the Employers National Insurance (NI) contributions, taking effect on 6 April 2025.
To summarise:
The NMW for workers aged 18-20 will rise to £10 per hour
The NMW for workers aged 21 and over will rise to £12.21 per hour.
The Employers NI will rise from 13.8% to 15%, with the secondary threshold (where employers begin to pay NI will drop from £9100 to £5000 annually.
However, to support small businesses, the Employment Allowance will rise to £10,500 from it's previous level of £5,000.
The changes will increase payroll costs for many employers, but the enhanced Employment Allowance has been created to support small businesses.
What will the impact be on your business?
Dependent upon the size of your business, these changes have the potential to increase the costs of employing staff.
Steps to take
If this affects you, you can:
Review your costs in general (this is always a recommended exercise)
Plan your workforce strategically.
Consider your budget carefully.
Consider a salary sacrifice scheme such as allowing employees to exchange a portion of their salary for a non-cash benefit such as a pension contribution.
Warning - a salary sacrifice scheme is not suitable for everybody, and employees must carefully consider their own personal circumstances before making any decisions.
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