Understanding the 2025 UK National Living Wage & National Insurance changes
From April 2025, important updates to the UK’s National Living Wage (NLW) and National Insurance Contributions (NICs) will come into effect. These changes will impact workers and employers alike, so it’s worth taking some time to understand what’s happening and how it might affect you.
At Australasian Recruitment Company, we’re here to break it all down for you, so you can feel confident and informed.
National Living Wage increase
Good news for workers: the National Living Wage is going up! From April 2025, those aged 21 and over will see a 6.7% increase, bringing it to £12.21 per hour for workers aged 21 and over.
This rise aims to align wages more closely with the cost of living, helping workers manage expenses like rent, transport, and utilities. Industries such as retail, hospitality, and care services, where the NLW often forms the starting point, are likely to see the biggest changes.
What does this mean for candidates?
For those in entry-level roles, this increase means more money in your pocket – great news if you’re saving for travel, settling into London, or managing day-to-day costs.
The rise could also highlight the growing opportunities available in various sectors. It’s a great time to reflect on your career goals and explore positions that offer the right balance of compensation, benefits, and work-life harmony.
Employers may adjust their packages to remain competitive, so be sure to factor in more than just pay when considering your options.
National Insurance contributions changes
It’s not just wages that are changing. From April 2025, adjustments to National Insurance Contributions (NICs) will also kick in.
Here’s what’s happening:
The secondary threshold for employer NICs will drop from £9,100 to £5,000, meaning employers will need to start contributing for employees earning over £5,000 annually.
The NICs rate will increase from 13.8% to 15%, which could push up employer costs. On a temporary role, this will mean the total Statutory Charge cost on a temporary rate will be 18.05% on the holiday inclusive pay rate.
To help ease the pressure on small businesses, the Employment Allowance will rise from £5,000 to £10,500, offering eligible companies some financial relief.
What does this mean for employers?
These changes mean higher costs for employers, particularly those with staff earning close to the £5,000 threshold. It’s likely many businesses will need to re-evaluate their wage structures, payroll systems, and overall budgets.
For smaller businesses, the increased Employment Allowance will provide some breathing room. This support could help offset the additional costs, especially for companies already operating on tight margins.
Employers might also need to review their hiring strategies and consider how to stay competitive while managing increased labour costs.
What’s the bigger picture?
These changes aim to balance the needs of workers and businesses. While higher wages will support employees, employers will need to navigate the added expenses of NICs. Thankfully, the rise in the Employment Allowance offers some help, particularly for smaller organisations.
Whether you’re a candidate or an employer, it’s worth taking stock of these updates and planning ahead.
We’re here to help
At Australasian Recruitment Company, we specialise in supporting employers and candidates as they navigate the ever-changing job market. If you have questions about how these updates might impact you, don’t hesitate to reach out.
Let us help you stay ahead of the curve.