As we start a new year, we also prepare to begin the 2025/26 tax year and close off 24/25 tax year. One of the many benefits of outsourcing your payroll is that we handle many of the tasks associated with a tax year’s end and start. However, it’s important to understand the changes which will come into place from 6th April 2025.
Below, we provide details of the key information that will change, along with key dates for the 25/26 tax year.
National Minimum Wage (NMW)
NMW rates are increasing from 6th April.
National Living Wage for those aged 21 and over is increasing to £12.21.
18 to 20 year old rate is increasing to £10.00.
The rate for 16 to 17 year olds is aligning with the apprentice rate, both increasing to £7.55.
We will be doing an exercise to identify anyone who, from 6th April, will be below minimum wage rates and will be in contact with what to do.
National Insurance Contributions
One of the key changes that will come into effect in April is Employer NI. Currently, the rate at 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 second 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.
Employment Allowance
Who can claim for Employment Allowance is changing and the amount given to employers is also changing. Previously you would need to have a National Insurance liability of less than £100,000 in the previous tax year to claim employment allowance, this is being removed for 25/26 tax year.
Employment Allowance is also rising from £5,000 to £10,500.
Next steps? We will submit the request for Employment Allowance to HMRC through running the payroll, you will not need to do anything.
Tax Allowances and Rates Frozen 27/28
There will be no changes to personal tax allowances and the rates at which tax is paid, with the government confirming that these will be frozen until the 2027/28 tax year.
P60s
All P60s need to be sent to employees by 31st May 2025. Only employees who were employed on the last day of the tax year, 5th April, will receive a P60. If they left before this date, then their tax information will have been supplied on their P45.
We aim to have all P60s produced and sent out by mid-May.
P11ds / Payrolling Benefits
2025/26 will be the last year P11ds will be produced. From April 2026, it will be mandatory for all benefits to be processed through payroll. If you are one of our customers still receiving P11ds, we will contact you to discuss how we will move you from P11ds to Payrolling Benefits.
P11ds for 24/25 need to be submitted to HMRC by 6th July. From April onwards, we will be in contact to request all the relevant information.
