We’re sure that you have heard of the changes to Wages and Employer National Insurance contributions that are happening in April.
However, do you also know about the increase in Employment Allowance?
It can be daunting trying to understand how these changes will affect your business and finding the best ways to navigate them. Read this article to find our advice and recommendations for your next steps.
But first, let’s go over the changes that are coming into effect in April 2025.
(All information below taken from GOV.UK)
National Living and Minimum Wage Increases
The above new hourly rates for employees have been announced to take effect this April.
National Living Wage is due to increase by 6.7% to £12.21 for over 21s, alongside Minimum Wage increasing by 16.3% to £10 for ages 18 -20, and 18% to £7.55 for under 18s and apprentice rates.
Employer National Insurance Contributions (NICs) and Employment Allowance
In addition to wage increases, there will be changes to Employer National Insurance Contributions (NICs):
- Rate: The rate will rise from 13.8% to 15%.
- Secondary Threshold: The threshold at which employers start paying NICs will decrease from £9,100 to £5,000 per annum.
On a positive note, to try and protect smaller businesses, the employment allowance is being increased from £5000 to £10,500.The old limit of £100,000 is also being removed.
This means that if you are an eligible employer, you could reduce your Class 1 National Insurance liability by £10,500 each year.
Check if you are eligible for this here.
What do these changes mean for my business?
The impact will vary from company to company. However, overall, the combination of increased wages and higher NICs will increase employment costs.
It’s essential to assess how this will affect your business payroll and plan effectively to manage these additional costs.
How can we help?
Keeping up to date with employment legislation can be tricky. We can help in several ways:
Cost- effective staffing solutions: We offer flexible staffing options, including temporary and contract placements, allowing you to manage costs effectively during this transition.
Compliance assurance: Our team stays updated with the latest employment legislation. You can be confident your hiring practices are compliant all relevant laws.
Knowing the market: We can offer specific advice for your industry to help you stay competitive and profitable, including salary benchmarking and hiring insights.
Finding skilled talent: Specialising in Manufacturing, Engineering and Hospitality, we help you fill critical roles efficiently, ensuring the perfect match to help your business.
What we recommend:
- Check your eligibility to claim employment allowance.
- Conduct a budget analysis and identify where adjustments are necessary.
- Review pricing strategies. Assess whether you need to update your pricing model to maintain profitability.
- Invest in employee engagement, incentives and retention to minimise staff turnover and enhance productivity. Also, ensure you inform your staff about wage increases.
- Consider salary sacrifice schemes to help manage costs. Think of benefits such as enhanced pension contributions or health insurance.
If you have any questions or need assistance in preparing for these legislative updates, please don’t hesitate to contact us.
Call our office on 01603 733144 for our Engineering and Manufacturing department, or 01603 369950 for our Hospitality department.
Alternatively, get in touch via our contact page or social media pages.
Thank you for reading!
Until next time,
