As expected, the Chancellor did not deliver any major announcements or changes in her Spring Statement speech yesterday. Instead, standing firm on her promise to deliver economic growth and stability. This was welcome news for employers, who breathed a sigh of relief as many are still grappling with the fallout from last year’s Autumn Budget.
Despite there being no further tax increase announcements for businesses, employers and HR professionals need to be prepared for the incoming changes on the way from April 2025 and plan accordingly. These changes include increases in employers’ National Insurance contributions, parts of the Employment Rights Bill coming into play, plus changes to National Minimum Wage and employment allowance.
Given this, let’s look at the key components that will impact employers from April 2025 and how HR can prepare for the changes:
Employment Rights Bill
After passing through the parliamentary stages in the House of Commons, proposed employer changes in the Employment Rights Bill are coming into play from April 2025. The key changes to note for employers are in respect of Statutory Sick Pay (SSP) :
- Removal of waiting days and abolition of the Period of Incapacity for Work (PIW)
- SSP is now payable from the first day of sickness, rather than the fourth
- All employees will be entitled to SSP, regardless of their earnings
- The new weekly rate is to be £118.75 or the ‘prescribed percentage’ of earnings’ (now expected to be 80%)
In preparation for the changes, employers need to ensure they have the correct software on hand to monitor this. It would be best for HR professionals to check in with their software providers to ensure they have programmed for it (though the likely answer is “No, we’re waiting for Royal Assent!”).
National Insurance contributions
From April 6th, employers’ NICs are increasing to 15%, which is up by 1.2%. The secondary threshold is reduced to £5,000, from £9,100. However, the primary NICs threshold remains frozen until April 6th 2028, and is only to be increased from 2028-29 in line with inflation (CPI).
For most companies, the introduction of the new NICs thresholds/allowance, which form the bulk of the change, is just a case of entering new parameters on their payroll software – it should only take 2 minutes maximum! It is important to ensure these changes are made to avoid unnecessary back payments or potential legal action for incorrect pay.
National Minimum Wage
From April 1st, the National Minimum Wage (NMW) will increase. With certain sectors increasing by up to 18% annually. The new NMW and National Living Wage (NLW) rates are as follows:
- NLW (21 and over) – from £11.44 to £12.21
- NMW (18 to 20) – from £8.60 to £10.00
- NMW (under 18) – from £6.40 to £7.55
- Apprentice rate – from £6.40 to £7.55
The annual lower earnings limit will be £6,500 (for a qualifying year). For single owner/director companies, it is important to note that the new minimum employers’ NICs need to achieve a qualifying year, which will effectively be £225 where previously it cost them nothing at all.
Employment allowance
Regarding employment allowance, April will see increases of up to £10,500, with a £100,000 total NICs limit removed, so large employers will qualify. However, public authorities are still excluded as well as single director companies. For small companies (owner managed type) it is important to consider their remuneration strategy (dividends v payroll) and whether they already have a qualifying year for state pension purposes.
Ultimately, there were no surprises for HR announced from the Chancellor’s Spring Statement, however, it is important for HR professionals to note the impending tax changes from April 2025 and plan accordingly!
