The new National Minimum Wage (NMW) and the National Living Wage (NLW) will be increasing as of 6th April 2025. A summary of the new rates are shown below.

The government sees the increases as a significant step towards achieving a “genuine living wage” for workers. However, employers offering any salary sacrifice benefits will need to pay their employees above these rates to ensure any sacrifice deductions don’t take their staff below the new rates.

If your company is operating a salary sacrifice pension scheme, you will need to decide if the increase in salaries should be sufficient to allow your employees to continue on the scheme. By increasing your salaries to the suggested rates below, your employees will be eligible to remain/enroll onto the salary sacrifice pension scheme. Please see table below for the hourly minimum rates required based on a 5% employee pension contribution. Employees will need to be re-assessed for salary sacrifice pension eligibility at the start of the new tax year and any employees who are no longer eligible will need to be moved onto your non-salary sacrifice pension scheme. We have assumed only employees over 22yrs have been auto enrolled.

Table shows minimum rate of pay

HMRC requires employers to have processes in place to ensure a salary sacrifice deduction will not take workers below the National Minimum/Living Wage. You will need to be clear on who is responsible for this task, be it your payroll provider, HR team or other member of staff.

If your company is currently offering, or are considering a Workplace Salary Sacrifice Pension Scheme, you may wish to share all/some of your Employer NIC savings with your employees by uplifting your employer pension contribution. If you want to share 100% of your savings, some payroll software will calculate this automatically for you but others require a manual calculation, especially if you want to share a reduced percentage. To reduce the admin burden, we have created a table showing how you can easily share your savings by simply adjusting your employer contribution percentage. Please share this with your payroll team if this is of relevance to you.

This table reflects the percentage increase to your current employer contribution in order to share your NIC savings. The percentage of increase will depend on your employee’s current contribution percentage.

Changes to Employers Class 1 National Insurance come into place from 6th April 2025 in two areas:

Therefore, for an employee earning £30,000 per annum, employer NIC costs will increase from £2,884.20 to £3,750. By offering a salary sacrifice scheme such as Workplace Pension, Childcare or Cycle to Work benefit, employers can look to mitigate these costs - Speak to one of the Mintago Team if you don’t currently have any of these schemes in place and we will help save money for you and your team.

All employers meeting certain criteria are currently entitled to £5,000 annual Employment Allowance which reduces the Employers Class 1 NIC liability. From April 2025, this increases to £10,500. The amount is claimed in each pay period against employer NIC liabilities until you reach your limit. Any unused allowance is not carried into the following year.

If you have been unable to receive this due to last year's total employers liability being above £100,000, you will no longer have this restriction and will be able to utilise the allowance from April 2025. HMRC wont send you a formal letter so you don't need to wait for confirmation of this change.

All other restrictions to claiming Employment Allowance have remained unchanged such as single director only companies and linked companies.

Please refer to HMRC's gov.uk website should you wish to view further details on any of the above subjects.