National Living Wage and National Minimum Wage increase – April 2025

The National Living Wage and National Minimum Wage will increase in April 2025. Good for low-paid workers but when joined up with the increases to employer’s National Insurance it might be quite a burden to bear for employers!

National Living Wage and National Minimum Wage – what are they?

By law, an employer must pay a minimum amount on average for the hours you work. This is called the:

• National Living Wage (NLW) for anyone aged 21 or over
• National Minimum Wage (NMW) for anyone aged under 21 or an apprentice

Someone must be at least of school leaving age to get the National Minimum Wage.

Employers can choose to pay more than the minimum wage.

Increases to the National Living Wage and National Minimum Wage

New rates compared with current rates:

So, every increase is above the rate of inflation and the youngest get the highest levels of increase.

At a rate of £12.21 per hour, an adult earning the NLW and working 35 hours a week will earn £22,222 – a pay rise of £1,401 and if they work 40 hours a week then their annual salary becomes £25,396 which is a pay rise of £1,601.

Employer’s national insurance

The much-heralded increases in employer’s national insurance begin from April 6.

In summary:

• the rate of NI increases from 13.8% to 15%
• the amount an employee can earn before employer’s NI applies is falling from £9,100 to £5,000
• the Employment Allowance ( a rebate many employer’s can claim) is increasing from £5,000 to £10,500

The headline news is that large employers and some employers of low-paid staff will face a higher employer’s NI cost but some employers will be better off if the additional employer’s NI they’ll pay is less than the additional Employment Allowance they can claim.

Employment costs are rising in April for many businesses

There are some winners but many employers will be losers from these changes as more tax is raised across the UK.

It’s worth looking at your own business to see if you’re amongst the winners or the losers and make plans in respect of profitability and cashflow according to what you expect.

Michael

Related links:

ACAS summary

Increases in National Insurance – is your business better or worse off?

Bookkeeping, profitability and cashflow

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