The new National Living Wage and National Minimum Wage rates will come into force from 1 April 2025.
There are also changes to the National Insurance employers pay that take effect from 6 April. For many businesses, the April payroll will represent a sizeable step up in labour costs.
As a reminder, here is a quick recap of the changes.
National Minimum Wage rates
The new minimum wage rates are as follows:
| Hourly Rate | |
|---|---|
| National Living Wage (21 and over) | £12.21 |
| 18-20 Year Old Rate | £10.00 |
| 16-17 Year Old Rate | £7.55 |
| Apprentice Role | £7.55 |
| Accomodation Offset | £10.66 |
Employers National Insurance changes
The percentage rate of Employers’ National Insurance (NI) that’s paid on an employee’s earnings increases to 15% (from 13.8%).
The threshold that an employee needs to be earning before any Employers’ NI is due drops to £5,000 a year. Previously this was £9,500.
If you use online payroll software, the new Employers’ NI rates should be automatically included. However, please check with your payroll software provider if you are not sure.
The Growth Agenda: Small businesses putting forward ideas for growth
Goldman Sachs published their “The Growth Agenda” report last week. This is a report that puts forwards the ideas of small business owners that could help to boost the UK economy.
The report looks at issues around several areas that affect small businesses and include ideas that may help to drive growth. The main areas discussed in the report include:
- Access to finance
- Talent and the workforce
- Artificial intelligence
- Taxation & trading
- International markets
- Infrastructure
- Climate transition
For each area, the report includes a summary of the main challenges and then some key ideas that would help to mitigate some of the challenges.
The ideas have then been summarised into a 2-page ‘Key Calls to Action’ summary. These are split between quick wins (straightforward initiatives that could be introduced relatively easily), momentum builders (initiatives that will require time and investment), and fundamental changes (ambitious ideas and major transformations).
As examples of the ideas included, a suggestion is made to expand R&D credits to include AI implementation and training to incentivise AI implementation. A business rates reform is also proposed to protect sectors that are property-intensive.
Whether these policy ideas are likely to come to fruition remains to be seen. However, the government has confirmed that it will consult on establishing the Business Growth Service it announced in December. This is to be a one-stop shop that will provide government advice and support to small businesses and help with raising finance.
To review the report in full, see: https://www.goldmansachs.com/images/community-impact/10000-small-businesses/uk/news-and-programme-information/generation-growth-the-growth-agenda/Report.pdf