April 2025 Payroll & Tax Update

April 2025 Payroll & Tax Update

Payroll / April 17, 2025

The 2025–26 tax year brings major updates for employers and payroll teams. Key changes include a higher minimum wage, increased Employment Allowance, and adjustments to National Insurance.

From April 2025, the National Living Wage applies to workers aged 21+ (previously 23+), now £12.21/hour (up from £11.44). Other minimum wage rates are:

18–20: £10.00/hour
16–17 & apprentices: £7.55/hour
Accommodation offset: £10.66/day

Employers must ensure all staff meet the correct rate for their age/status.

Employee National Insurance rates remain unchanged:

0% up to £12,570
8% from £12,571 to £50,270
2% above £50,270

However, employer NIC costs have risen. The Class 1 rate is now 15% (up from 13.8%), and the Secondary Threshold has dropped to £5,000/year (from £9,100), meaning NICs start earlier. Class 1A and 1B NICs also align at 15%.

Good news: the Employment Allowance has doubled to £10,500, and the cap excluding those with NIC bills over £100,000 has been removed—benefiting more businesses.

Action Points:
✔ Update payroll software
✔ Adjust pay rates and contracts
✔ Recheck Employment Allowance eligibility
✔ Notify staff of changes
✔ Track NIC liabilities

These updates aim to support wage growth while increasing employer contributions to public funds. Staying informed is vital.

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