The UK government’s Autumn Budget introduces a variety of payroll-related updates set to impact employers and payroll management starting in April 2025. Here’s what employers need to know to stay compliant and manage payroll costs effectively.
Increase in Employer National Insurance Contributions (NICs)
Starting April 2025, employer NICs will rise from 13.8% to 15%, with the threshold where employers must begin paying NICs reduced from £9,100 to £5,000. This adjustment will increase costs for many employers; however, the Employment Allowance will rise from £5,000 to £10,500, allowing some employers to offset NIC costs.
Mandatory Digital Reporting for Benefits in Kind
As part of a phased rollout beginning in April 2026, employers will be required to report benefits in kind through payroll software. This shift is intended to simplify compliance with tax and NIC requirements for both employers and HMRC.
National Minimum Wage Increases
From April 2025, the National Living Wage for those over 21 will increase by 6.7% to £12.21 per hour. For workers aged 18-20, the minimum wage will increase by 16% to £10 per hour, reflecting significant rises to support employees amid inflation concerns.
Veteran Employment NIC Relief Extension
The budget extends NIC relief for businesses hiring veterans until April 2026, exempting employer NICs on earnings up to £50,270 for qualifying veterans in their first year of civilian employment. This incentive aims to support veteran employment by reducing payroll costs for employers.
Company Car and Vehicle Tax Changes
Double cab pick-up vehicles (DCPUs) with payloads over one tonne will be classified as cars for tax purposes, effective April 2025, impacting capital allowances, benefits in kind, and business deductions. Adjustments to Company Car Tax (CCT) rates will also see increases for zero-emission and low-emission vehicles starting in 2028.
Compliance Support from Qualitas Payroll
These changes reflect the evolving payroll landscape, with increased administrative requirements for employers. Qualitas Payroll supports businesses by implementing regulatory updates and managing compliance seamlessly.
If your business requires expert support in adapting to the latest payroll requirements, contact Qualitas Payroll today to learn more about our services.