As we approach April 2025, significant changes to employer National Insurance Contributions (NICs) and the National Minimum Wage (NMW) are set to take effect. These adjustments will impact businesses across the UK, and proactive preparation is essential to navigate the upcoming financial landscape effectively.

There are two key changes effective April 2025.The increase in Employer National Insurance Contributions (NICs) will rise to 15%, and the threshold at which employers start paying NICs for employees will decrease from £9,100 to £5,000.

This means for an employee earning £30,000 annually, the employer’s NICs will increase by approximately £865.80, raising the total employment cost to £33,750 from the previous £32,884.20. The average is £750 per person.

The increase in National Minimum Wage (NMW)  for Over-21 is an increase of 6.7%, from £11.44 to £12.21 per hour, and for 18 to 20-Year-Olds a significant rise of 16%, from £8.60 to £10.00 per hour.

So please find below the Adams Moore advise in preparing for this change

Financial Planning and Budgeting:

Understand your impact by reviewing the Payroll Budgets: Assess current payroll expenses and project the impact of increased NICs and wages. Adjust budgets to accommodate these changes.

This will mean your breakeven turnover will increase from April.

Operational Efficiency:

Are there advances in technology that will be able to make your workforce more efficient. Can Automation reduce the need to employ people for repetitive tasks, or can AI reduce overall unit cots.

In addition, look at all other overhead costs, can the business reduce utility costs or minimise waste that can contribute to overall savings.

Utilize Available Support:

Please ensure you are claiming the increased Employment Allowance. The allowance will rise from £5,000 to £10,000 in April 2025, providing eligible businesses with a reduction in their NICs bill. Ensure your business claims this relief if applicable.

For clients that use our payroll team this will be done automatically for you.

Pricing and Revenue Strategies:

Analyse whether a price increase for your products or services is feasible to offset higher operational costs. Ensure that any changes are communicated transparently to customers. You will only get one chance to do this.

In conclusion, the forthcoming changes in National Insurance and minimum wage rates present challenges but also opportunities for businesses to reassess and optimise their operations. By proactively implementing strategic measures, companies can navigate these changes effectively, ensuring continued growth and sustainability.

For individual advice tailored to your business needs, please contact the team at Adams Moore. As part of offering total support for you and your business, we are here to help you develop strategies that align with your business objectives.