Payroll expert at accountants and business advisers Whitley Stimpson provides an update following the budget outlining the changes to employers’ costs relating to national insurance and the increase in the national living wage.
In a significant move, the government has announced an increase in employers’ national insurance contributions to 15%, effective from April 2025.
This 1.2 percentage point rise is expected to generate £25 billion annually for the Treasury. While this increase is slightly lower than the anticipated two percentage points, the threshold for employer contributions will drop from £9,100 to £5,000, impacting many businesses.
The government is also expanding the Employment Allowance, removing the £100,000 eligibility threshold and increasing the allowance from £5,000 to £10,500. This change is expected to benefit 865,000 businesses, with more than half seeing no change or a gain in their NIC liabilities next year.
Tracy Gill, Payroll Manager at Whitley Stimpson explains: "These changes present both challenges and opportunities for businesses and it is crucial for employers to understand the implications and seek professional advice to navigate these updates effectively."
In addition to changes in national insurance, the national living wage will see a 6.7% increase, bringing it to £12.21 per hour from April 2025. This rise aims to support workers amidst rising living costs, with the government emphasising its commitment to a genuine living wage.
The national minimum wage for 18 to 20-year-olds will also see a significant increase of 16.3%, reaching £10.00 per hour.
While these changes are designed to support workers, they pose potential challenges for employers, particularly small businesses.
Tracy says: "With these substantial changes on the horizon, it's more important than ever for businesses to review their payroll strategies. At Whitley Stimpson, we are here to provide expert guidance and support to help businesses adapt and thrive in this evolving landscape."
Employers are encouraged to consult with Whitley Stimpson for tailored advice on managing these payroll changes and ensuring compliance with the new regulations. As the economic landscape shifts, having a trusted adviser can make all the difference in maintaining business stability and growth.
