Is your payroll ready for the 2025/26 tax year changes?

The new tax year is coming up fast, and with it come some important payroll updates that every employer needs to know about.  

From wage increases to National Insurance changes, these updates could affect your business. 

Minimum wage is going up  

Starting 1 April 2025, the National Minimum Wage (NMW) is getting a boost: 

• 21 and over (National Living Wage) – Up to £12.21 per hour (a 6.7 per cent increase). 

• Ages 18 to 20 – Rising to £10.00 per hour, a 16.3 per cent jump. 

• Under 18 and apprentices – Increasing to £7.55 per hour, up 18 per cent. 

If you have employees on minimum wage, make sure your payroll and budget are updated and prepared for these changes.  

Employers will pay more in National Insurance 

From 6 April 2025, businesses will see changes to National Insurance: 

• The rate for employer NICs is increasing to 15 per cent 

• The threshold where employers start paying NICs is dropping from £9,100 to £5,000 

This means higher payroll costs for many employers, so it is worth planning ahead. 

Employment Allowance increase 

To help offset rising costs, the Government is making some positive changes to Employment Allowance: 

• The allowance is doubling from £5,000 to £10,500 

• More businesses can now claim, as previous restrictions have been removed 

This is great news for small and medium-sized enterprises (SMEs), giving them extra financial breathing room. 

Statutory pay is increasing too 

From April 2025, employees will see higher statutory payments: 

• Maternity, Paternity, Adoption, Shared Parental, and Parental Bereavement Pay – Increasing to £187.18 per week (up from £184.03). 

• Statutory Sick Pay – Rising to £118.75 per week (up from £116.74). 

• Earnings threshold – Increasing slightly to £125 per week. 

Make sure your payroll reflects these new rates so your employees get what they are entitled to. 

What should you do next? 

With these changes coming soon, here are a few key steps to stay ahead: 

• Update your payroll software so everything runs smoothly 

• Review your budget to factor in the increased employment costs 

• Let your employees know about pay adjustments so there are no surprises 

Need a hand with payroll? Get in touch today for expert payroll advice and support to make the 2025/26 tax year stress-free!