In her Spring Statement yesterday, the Chancellor didn’t make any major changes or announcements. The Chancellor instead stood firm in her commitment to economic stability and growth. The news was welcomed by employers who are still dealing with the fallout of last year’s autumn budget.
These changes include increases in employers’ National Insurance contributions, parts of the Employment Rights Bill coming into play and changes to the National Minimum Wage and employment allowance. The changes include an increase in the employers’ National Insurance Contributions, the Employment Rights Bill , and changes to National Minimum Wage, Employment Allowance, as well as changes to Employment Rights Bill .
Let’s take a look at some of the major changes that will affect employers in April 2025, and how HR can be prepared for them.
Employment Rights Bill
The Employment Rights Bill, which has been passed through Parliament and the House of Commons to date, will bring about changes for employers in April 2025. Employers should be aware of the key changes in relation to Statutory Sick pay (SSP).
- The period of incapacity for work (PIW) is abolished and the waiting days are removed
- The SSP now pays from the first day, not the fourth.
- SSP will be available to all employees, regardless of their income
- The new rate for the week is PS118.75, or 80% of your earnings.
Employers need to make sure they have the right software to monitor the changes. If HR professionals want to be sure they are prepared, it is best to contact their software provider to confirm that the program has been programmed.
National Insurance Contributions
Employers’ NICs will increase by 1.2% from April 6 to April 10. The secondary threshold has been reduced from PS9100 to PS5,000. The primary NICs level remains frozen until April 6 th 2020, but will only be adjusted from 2028-2029 to reflect inflation (CPI).
For most companies, the introduction of the new NICs thresholds/allowance, which form the bulk of the change, is just a case of entering new parameters on their payroll software – it should only take 2 minutes maximum! This is vital to avoid any unnecessary back-payments or legal action due to incorrect pay.
National Minimum Wage
The National Minimum Wage will be increasing on April 1 . Certain sectors will see an increase of up to 18% per year. New NMW and National Living Wage rates:
- NLW (21 years and older) – PS11.44 – PS12.21
- NMW (18-20) – From PS8.60 up to PS10.00
- NMW (under age 18) – from PS6.40 up to PS7.55
- Apprentice Rate – From PS6.40 up to PS7.55
The lower annual earnings limit is PS6,500 for a qualifying period. It is important for single-owner/director companies to be aware that they will have to pay the minimum employer’s NICs to qualify as a qualifying company. This will cost them PS225, whereas previously, there was no charge.
Employment allowance
In April, the employment allowance will increase by up to PS10 500. The limit of PS100 000 for total NICs will be removed. This will allow large employers to qualify. Public authorities and single-director companies are excluded. It is important for small businesses (owner-managed type) to consider the remuneration strategies (dividends or payroll) as well as whether they have already had a qualifying state pension year.
The Chancellor’s spring statement did not reveal any surprises to HR. However, HR professionals should be aware of the upcoming tax changes that will take place in April 2025, and plan accordingly.
