Payroll changes set to bring higher costs for employers this April

April 2025 is not too far away now and there are some big payroll changes on the way for various rates of pay which employers need to start planning for.

Here at Lambert Chapman, we have started that preparation by identifying which of our clients will be affected by the National Living Wage and National Insurance changes. We have created a tool to calculate the increases, and the results are being shared and discussed with clients in advance, avoiding any nasty surprises come April.

In summary, here are the payroll changes coming into force from April 2025:

Changes to employers National Insurance Contributions (NICs)

From April 2025, employers will see an increase in their contributions from 13.8% to 15%.

In addition, employers currently contribute to their employee’s national insurance if the employee earns over £9,100 per year, but from April, the threshold will be reduced to £5,000 per year, which is likely to bring more employees into your calculations.

The government has tried to alleviate some of that cost by increasing the employer allowance from £5,000 to £10,000. They have also removed the restriction that currently applies to companies who have incurred a secondary class 1 NIC liability of more than £100,000.

This does allow for some larger companies who may not have been eligible until now, to claim, but combined with the increased national living wage, it will be interesting to see how much this helps employers moving forward.

Changes to the National Minimum Wage

I have listed the current and new National Minimum Wage rates below.

Combined with the frozen tax rate bands, what stands out to me is just how many more employees will now reach that £5,000 threshold for employer’s national insurance contributions.

Statuary Sick Pay (SSP)

Previously, small employers were able to recover SSP paid to employees, but this was removed. As of April 2025, SSP will rise to £118.75 per week, a rise of 1.71%. The qualifying threshold will also increase from £123 to £125, which is what an employee must earn as an average.

Parental Pay

From April 2025, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Shared Parental Pay, Statutory Adoption Pay, and Statutory Bereavement Pay will all see an increase to £187.18 from £184.03 per week. Employers can still usually reclaim 92% of parental pay. If you claim small employers’ relief, you can claim 103%.

Neonatal Care (Leave and Pay)

If your child requires neonatal care, the government has passed a bill that gives parents the right to 12 weeks of additional leave which is added to the existing parental leave options. This major change will come into force from April 2025.

Unsure where to start with all these changes?

We operate a full-service payroll bureau from our Braintree office, meaning these updates could all be handled on your behalf.

With fixed-price processing and no minimum contract, it could cost less than you think to outsource your payroll to us.

If you would like us to prepare a quotation and look at the potential financial impact of these changes in April, get in touch and we will be happy to help.