The new tax year is just around the corner, and with it comes changes that will impact your business expenses. Staying on top of these updates will help you manage costs effectively and ensure compliance. Here’s what you need to know to stay ahead.
National Minimum Wage Increases
Starting April 2025, the minimum wages for workers will rise. Here’s the breakdown:
- Workers aged 23 and over: £12.21 per hour (up from £11.44) – a 7% increase.
- Workers aged 18-20: £10.00 per hour (up from £8.60) – a 16% increase.
- Workers under 18: £7.55 per hour (up from £6.40) – an 18% increase.
- Apprentices (under 19 or in their first year): £7.55 per hour (up from £6.40) – an 18% increase.
These changes mean higher payroll costs, so make sure to review your wage structures and budget for these increases. Staying compliant with minimum wage rules is essential to avoid penalties.
Updates to Employee Payments
Some key payments for employees will also increase:
- Maternity, Paternity, Shared Parental, and Bereavement Pay: £187.18 per week (up from £184.03).
- Sick Pay (SSP): £118.75 per week (up from £116.75).
- Neonatal Care Pay: A new benefit at £187.18 per week, offering financial support to parents caring for newborns in neonatal care.
Be sure to adjust your payroll system to reflect these new amounts.
National Insurance Contributions (NIC)
- Employer NIC Rate: Rising from 13.8% to 15%. This means you’ll pay more for every employee earning above the NIC threshold. Plan your budget accordingly.
Recovering Employee Payments
Good news! If your business had NIC bills below £45,000 last year, you can now recover 108.5% of statutory payments (up from 103%). For businesses with higher NIC bills, you can recover 92% of these costs.
Employment Allowance Boost
The Employment Allowance, which reduces what you pay in NIC, is doubling from £5,000 to £10,500. This is a fantastic opportunity for small businesses to save money and reinvest in their operations.
What You Should Do Next
- Review Wages: Update employee pay rates to meet the new minimum wage requirements.
- Plan for Increases: Factor in higher payments like maternity and NIC when planning your budget.
- Take Advantage of Allowances: Use the increased Employment Allowance to cut costs.
- Stay Compliant: Make sure your payroll system is updated to avoid any penalties.
Here is the full guide from HMRC: Rates and thresholds for employers 2025 to 2026 – GOV.UK
Let City Heights Accounting Services Help You
We know how overwhelming these changes can feel, but you don’t have to face them alone. At City Heights Accounting Services, we specialise in helping businesses:
- Stay compliant with government rules.
- Budget effectively for payroll and expenses.
- Streamline payroll systems to save time and money.
Get in touch with us today to ensure your business is ready for the new tax year and beyond.