April 2025 has brought adjustments to employment costs, including wage increases, changes to National Insurance contributions (NICs), and updates to statutory payments. Understanding these changes and planning ahead will help businesses adapt effectively.
Key changes effective from April 2025
1. National Minimum and Living Wage adjustments
From 1 April 2025, the UK government introduced increases to the National Minimum Wage (NMW) and National Living Wage (NLW):
- National Living Wage (21+): Rising from £11.44 to £12.21 per hour
- Ages 18-20: Increasing from £8.60 to £10.00 per hour
- Ages 16-17 & Apprentices: Increasing from £6.40 to £7.55 per hour
Businesses employing younger workers—particularly in retail, hospitality, and other sectors—should review payroll budgets accordingly.
2. Employer NIC adjustments
From 6 April 2025, employer NICs increased from 13.8% to 15%. Additionally, the NIC threshold for employees was lowered from £9,100 to £5,000, meaning contributions now apply to a more significant portion of employee earnings.
These changes require payroll reviews to ensure businesses are managing contributions effectively.
3. Statutory payments update
Statutory benefits for employees on leave also increased from April:
- Statutory Maternity, Paternity, Adoption, and Shared Parental Pay: Increased from £184.03 to £187.18 per week.
- Statutory Sick Pay (SSP): Rose from £116.75 to £118.75 per week.
Employers should incorporate these updates into financial planning to manage leave-related payroll costs.
Tips for responding to these changes
Now that these changes are in place, businesses may find it beneficial to review operations and budgets. Here are three key steps to consider:
1. Review payroll and budgeting
- Assess payroll structures to understand how wage adjustments affect costs.
- Forecast NIC contributions and factor them into financial planning.
- Consider whether product or service pricing adjustments are needed.
2. Focus on productivity and workforce planning
- Explore technology and process improvements to enhance efficiency.
- Strengthen employee retention strategies to support workforce stability.
- Consider apprenticeship schemes and workforce development initiatives.
3. Plan ahead with expert support
The Accelerated Growth Programme is here to help you manage employment cost changes and plan for sustainable growth. Our expert mentors provide tailored financial planning advice and workforce strategy guidance to ensure your business stays competitive.
Please speak to your AGP Relationship Manager today to explore how we can help your business adapt to these changes.