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!
By law, an employer must pay a minimum amount on average for the hours you work. This is called the:
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.
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.
The much-heralded increases in employer’s national insurance begin from April 6.
In summary:
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:
Increases in National Insurance – is your business better or worse off?
Bookkeeping, profitability and cashflow
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