As of the 6th April 2025, several changes to employment law will impact employers in the UK, including adjustments to the National Minimum Wage, Employer National Insurance contributions and Accommodation Offset. This helpful post details these changes below:
National Minimum Wage Increases
From April 2025 the new National Minimum Wage rates are as follows:
Under 18: £7.55 per hour gross
Aged 18 – 20: £10.00 per hour gross
Aged 21 and over: £12.21 per hour gross
These rates represent the minimum amount that must be paid for each hour worked. It’s important to ensure compliance with these rates to avoid any legal issues.
Employer National Insurance (NI) Contributions
Employers should prepare for the following changes to their NI contributions:
Rate Increase: The employer's NI rate will rise from 13.8% to 15%.
Threshold Reduction: The earnings threshold for NI contributions will decrease from £9,100 to £5,000 per annum.
These adjustments will mean higher costs for employers. The below monthly salary breakdown reflects the costs of an employee earning £35,000 gross per annum with a standard pension scheme and the full tax free allowance:
Monthly | |
Taxable Gross | £2,916.67 |
Employer NIC | £375.10 |
Employer Pension | £71.91 |
Employer Total Cost | £3,363.68 |
Employee NIC | £149.49 |
Employee Pension | £95.87 |
Employee Tax | £373.60 |
Net to Nanny | £2,297.71 |
Accommodation Offset
The accommodation offset rate, which allows employers to provide accommodation to employees as part of their job role, will increase to £10.66 per day (£74.62 per week).
Considerations for Employers
Employers must ensure that when applying accommodation offset to their employee’s pay, their hourly rate does not fall below National Minimum Wage minus the accommodation offset rate for each day within that pay period.
If you wish to discuss the financial impact of these changes with us please do get in touch with our payroll team on 01737 816 320 who will be happy to help!