April 2025 National Insurance and Minimum Wage increase
From April 2025, the UK National Insurance (NI) and National Minimum Wage (NMW) will increase. The key updates include:
- National Insurance increase for businesses - Employer NI contributions will rise from 13.8% on salaries above £9,100 to 15% on salaries above £5,000
- National Minimum Wage increases - aligning with inflation and economic trends
- Business rates relief reducing
These changes, recommended by the Low Pay Commission (LPC), aim to support workers by ensuring wages keep pace with inflation and meet the goal of reaching at least two-thirds of median earnings.
What will the UK Minimum Wage be in 2025?
From 1 April 2025, The National Minimum Wage rates for 2025 are as follows:
First 12 weeks of assignment:
|
Category of worker |
NMW |
Umbrella |
|
National Living Wage Rate (Aged 21 and over) |
12.21 |
15.95 |
|
18-20 Year Old Rate |
10.00 |
13.10 |
|
16-17 Year Old Rate |
7.55 |
9.90 |
|
Apprentice Rate |
7.55 |
9.90 |
Post 12 weeks:
|
Category of worker |
NMW |
Umbrella |
|
National Living Wage Rate (Aged 21 and over) |
12.21 |
16.25 |
|
18-20 Year Old Rate |
10.00 |
13.35 |
|
16-17 Year Old Rate |
7.55 |
10.10 |
|
Apprentice Rate |
7.55 |
10.10 |
How to ensure compliance with the National Minimum Wage
As an employer, you will need to ensure that the correct rate is being paid to your employees on a weekly or monthly basis.
To remain compliant, you should be:
- Monitoring and keeping up the date with the annual increases and applying these to your employees.
- Regularly checking and updating payroll databases holding employees’ birthdays. For example, updating payroll when an employee reaches a certain milestone such as 18, 21 or 25.
- Ensuring that you are not entering a salary sacrifice in any way which could be lowering hourly rate. These could include pension schemes, cycle-to-work schemes, and company car.
- Ensuring your employees are paid the correct rate in any transition of job role. For example, the increase in pay from apprentice rate to normal salary.
- Ensuring you are not deducting work materials such as uniform or tools from an employee’s payslip.
What are the consequences of offending the National Minimum Wage?
Failing to comply with the HMRC minimum hourly rates could result in penalties of up to £20,000 per worker, alongside the repayments of any underpayments to the specified employees affected.
The UK Government has re-affirmed its commitment to enforcing minimum wage laws and will continue to publicly name and shame businesses that fail to comply.