April marks the start of a new financial year, and with it comes a wave of important updates to pay rates and employer obligations. Among the key changes this year are increases to the National Minimum Wage, family-friendly statutory payments, and employer National Insurance contributions.
Let’s break down what employers need to know.
From 1 April 2025, new rates for the National Minimum Wage and National Living Wage will take effect. These increases are especially important as they come during a time when both employers and employees are feeling the pressure of rising living costs.
Here are the updated rates:
Age Group | From 1 April 2025 | From 1 April 2024 | % Increase |
National Living Wage (21 and over) | £12.21 | £11.44 | 6.70% |
National Minimum Wage (18–20) | £10.00 | £8.60 | 16.03% |
16–17 | £7.55 | £6.40 | 18.00% |
Apprentices (under 19 or in first year) | £7.55 | £6.40 | 18.00% |
The government is gradually working to close the gap between younger and older workers’ wages, and the sharp rise in the 18–20 category reflects this goal.
A common issue for employers is missing pay increases tied to employee birthdays or apprenticeship milestones. In fact, 16% of employers recently “named and shamed” by the government failed to pay the correct National Minimum Wage due to these oversights.
To stay compliant, companies should set calendar reminders to adjust pay at the correct time—specifically at the start of the next pay reference period after a rate change.
For example:
If Molly is paid monthly on the 15th, the updated wage applies from the pay period starting 16 April. This means she’ll receive the old rate from 1 to 15 April. Employers should clearly explain this to avoid confusion or complaints.
From 6 April 2025, statutory family-related payments (like maternity, paternity, adoption, shared parental, and bereavement pay) will increase to £187.18, up from £184.03.
This increase also now includes neonatal care pay, introduced for the first time.
The lower earnings limit (LEL)—the minimum earnings needed to qualify for statutory payments—will increase from £123 to £125. Meanwhile, Statutory Sick Pay (SSP) will rise to £118.75, up from £116.75. Both changes take effect on 6 April 2025.
Another major change is to employer National Insurance contributions (NICs). From 6 April 2025, the NIC rate will rise from 13.8% to 15%. Additionally, the threshold at which employers start paying NICs will drop from £9,100 to £5,000.
These changes are expected to raise around £25 billion for the Treasury and could cost employers around £800 more per employee each year.
To help smaller businesses, the employment allowance will increase from £5,000 to £10,500, and the previous £100,000 eligibility cap will be removed—meaning more businesses can benefit from this relief.
Employers must review their payroll systems and ensure they are ready for the upcoming increases, especially in the National Minimum Wage. Since these changes take effect on different dates in April, it’s essential to double-check timelines and apply the right rates at the right time.
Getting ahead of these updates will help businesses stay compliant and avoid unnecessary penalties or employee disputes.
From 1 April 2025, the National Minimum Wage rates will increase as follows:
The National Living Wage (for those aged 21 and over) will also rise to £12.21 per hour.
The new National Minimum Wage rates take effect from 1 April 2025. However, the updated rates apply from the next pay reference period following this date, not necessarily on 1 April itself.
The applicable National Minimum Wage rate depends on an employee’s age and apprenticeship status. Employers should regularly check birthdays and apprenticeship milestones to ensure the correct rate is paid.
Paying employees below the legal National Minimum Wage is a breach of employment law. The government regularly publishes a list of companies who fail to comply, and penalties can include fines and reputational damage.
You must apply the new rate from the start of the first full pay reference period after 1 April 2025.
Example: If your employee is paid monthly on the 15th, the new rate starts from 16 April—not 1 April.
The National Minimum Wage applies to workers under 21 and apprentices. The National Living Wage applies to employees aged 21 and over. From April 2025, the National Living Wage will be £12.21.
Yes, in addition to National Minimum Wage increases, the following changes will take place:
To stay compliant:
Yes, it may impact smaller businesses, especially when combined with the rise in employer National Insurance contributions. However, the employment allowance has increased to £10,500, and the £100,000 cap has been removed to provide more support to small and medium businesses.
Official guidance is available on the UK Government website and through HR resources like Croner-i and CIPD. Regular updates will help ensure you’re paying the correct National Minimum Wage and complying with all payroll-related legal changes.
If you are a self employed, business owner/director of company looking to get your accountancy and taxation matters sorted, look no further. We, at Naail & Co, are pro-active and easily accessible accountants and tax advisors, who will not only ensure that all your filing obligations are up to date with Companies House and HMRC, but also you do not pay a penny more in taxes than you have to. We work on a fixed fee basis and provide same day response to all your phone and email enquiries. We will also allocate a designated accounts manager who would have better understanding of your and business financial and taxation affairs. Book a free consultation call using the link below.
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