The chancellor of the exchequer, Rachel Reeves, delivered the first budget of the new Labour government on 30 October 2024. Within the budget, as always, was a stream of information. Below we focus on what does the budget mean for employer costs from April 2025 as well as discussing what changes will happen to payrolling benefits.
Employer Costs
One of the key changes that will come into effect in April 2025 is Employer NI. Currently the rate in which Employers pay NI is 13.8%, from April this will rise to 15%.
Alongside this the threshold for employers paying NI will also decrease. Currently the Secondly Threshold sits at £9,100 a year/£758 per month. The threshold from April 2025 will drop down to £5,000 a year/£416.67 a month.
Examples of how the change will look:
- If you have an employee who earns £30,000 per year/£2,500 per month you will currently be paying £240.40 in Employer NI per month.
From April 2025, you will now pay £312.50. This is an increase of £72.10 a month. - If you have an employee who earns £6,750 per year/£562.50 a month you will currently not be paying any Employer NI for this individual.
From April 2025, you will now be paying £21.87 a month.
National Minimum Rates will also be increasing.
The National Living Wage currently sits at £11.44 per hour and from April 2025 will be £12.21 per hour. This is an increase of 6.73%.
The rate for 18 to 20 year olds currently is £8.60, from April 2025 will be £10. This is an increase of 16.28%.
Apprenticeship rate is currently £6.40, from April 2025 this will rise to £7.55. This is an increase of nearly 18%.
Employment Allowance will also be changing from April 2025. Employment Allowance currently allows eligible employers to reduce their annual National Insurance liability by up to £5,000. To be eligible you need to be a business or charity and your employers’ Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.
From April 2025, the Employment Allowance will be increasing to £10,500 and the criteria of £100,000 liability will no longer be applicable. This means a lot more businesses across the country will be able to claim Employment Allowance.
We currently have one customer who is able to claim the employment allowance, in April 2025 this will mean that more of our customers will now be able to claim the employment allowance.
What do you need to do? Nothing if we run your payroll. We will be working through all of our payroll customers and any that are eligible we will process the employment allowance on their behalf with HMRC.
Payrolling Benefits
Within the budget it was announced that the deadline for payrolling benefits will stick to April 2026.
The current position is that taxable benefits and expenses must be reported to HMRC on Forms P11D and P11D(b) by 6 July following the end of the tax year.
Employers can now opt in to payrolling their benefits, which means P11Ds would no longer be needed.
