1. National Insurance Contributions (NICs)
- Employee NICs: From 6 April 2024, the primary rate remains at 8%, and employer NICs are set to increase from 13.8% to 15% starting 6 April 2025.
- Employer NIC Threshold Changes: The Secondary Threshold, currently £9,100, will decrease to £5,000 annually from April 2025, holding this limit until April 2028.
- Employment Allowance: From April 2025, the Employment Allowance will increase to £10,500 and will now be available to all employers regardless of NIC bills size, removing the previous £100,000 cap on employer NIC bills.
2. Self-Employed NICs
- Class 4 NICs remain at 6% and 2% starting April 2024.
- Class 2 NICs allow access to contributory benefits with profits of £6,725 or more, without payment of Class 2 NICs.
3. National Living Wage (NLW) and National Minimum Wage (NMW)
Effective from 1 April 2025:
- National Living Wage: Increases to £12.21 for employees aged 21 and over.
- Youth Rates: Adjustments include a £10.00 hourly rate for ages 18-20, and £7.55 for 16-17 and apprentices.
4. Mandated Payroll Reporting for Benefits in Kind
From April 2026, all employers will need to use payroll software to report and pay tax on benefits in kind, applying to both Income Tax and Class 1A NICs.
5. Statutory Neonatal Care Pay
This new legislation confirms that Statutory Neonatal Care Pay will be subject to Income Tax, aligning it with maternity and paternity pay.
6. Umbrella Company PAYE Responsibility
From April 2026, recruitment agencies must account for PAYE on payments made to workers via umbrella companies. If no agency is involved, the end client business will be responsible.
These updates reflect payroll changes impacting employers, employees, and the self-employed from 2024 onwards.
