Employee statutory payments are due to increase from April 2025. These statutory payments include sickness, maternity, adoption, paternity and bereavement.
Statutory Sick Pay (SSP) will rise from £116.75 to £118.75 per week, with a qualifying threshold of £125 per week. Under the Employment Rights Bill, SSP will become payable from the first day of sickness although this will not take effect until next April.
Statutory maternity pay, maternity allowance, statutory adoption pay, statutory paternity pay, statutory shared parental pay and parental bereavement pay will all rise from £184.03 to £187.18 per week. The lower earnings limit will increase to £125 while the maternity allowance threshold will remain at £30 per week.
It is important to note that most employers will still be able to reclaim 92% of workers’ statutory pay for maternity, adoption, paternity etc. This together with the increase in the employment allowance to £10,500, will ease the impact, especially for vulnerable smaller businesses.
National Minimum Wage Increases
The national minimum wage increase will come into force on 1 April 2025. The national living wage is due to increase to £12.21 per hour. For 18- to 20-year-olds the minimum wage will increase to £10.00 per hour, and for 16- to 17-year-olds it will increase to £7.55. The increase in the national living wage rate is expected to have the highest real value in the history of the UK’s minimum wage.
National Insurance Increases
From 6 April 2025, the government will be implementing four significant changes to employer national insurance contributions (NICs). Two of these changes will result in substantial tax increases. The secondary Class 1 National Insurance threshold will be lowered from £9,100 to £5,000 per year and the main rate of secondary Class 1 National Insurance Contributions will rise from 13.8% to 15%. Furthermore, the rates for Class 1A and Class 1B employer contributions, which apply to taxable benefits-in-kind, will increase accordingly.
To help offset some of these increases, the government is enhancing the employment allowance in two ways. Firstly, the current restriction limiting it to employers with an annual employer NICs liability of less than £100,000 will be removed. Secondly, the maximum amount employers can save through the allowance will increase from £5,000 to £10,500.
Finally, the government plans to increase the Class 1 lower earnings limit for 2024-2025, which is the threshold at which employees start paying national insurance.
The National Insurance increases are projected to generate net revenue for the government of almost £24 billion in 2025-2026, rising to estimates £26 billion by 2029-30.