With the new tax year fast approaching, businesses and employees need to be aware of key changes coming into effect from 6 April 2025, particularly regarding the National Minimum Wage (NMW) and National Living Wage (NLW). These increases will impact wages across different age groups, as well as employer costs.

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What’s Changing?

From 1 April 2025, the new rates will be:

• Aged 21 and over: £12.21 per hour (6.7% increase)
• Aged 18 to 20: £10.00 per hour (16.3% increase)
• Apprentices & under 18s: £7.55 per hour (18% increase)
• Apprentices aged 19+ who have completed the first year of their apprenticeship are entitled to the rate for their age.

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It does not matter how many staff an employer has; they must, by law, pay the minimum wage to any employee that is entitled to it. Any employer knowingly not paying the correct minimum wage rates may face legal action from HM Revenue and Customs (HMRC).

Who is Entitled to NMW & NLW?

Workers, regardless of their contract type, must be paid at least the minimum wage for their age. This includes:

• Full-time, part-time, agency, and zero-hours contract workers
• Casual workers, temporary staff, and those on probation

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Exceptions apply to specific groups, such as company directors, family members working in a family business, and individuals below school leaving age.

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Additional Employer Costs

Beyond wage increases, employers will also face rising National Insurance Contributions (NICs):

• Employer’s NIC rate: Increasing from 13.8% to 15%
• Threshold reduction: Dropping from £9,100 to £5,000, adding an estimated £615 per employee in additional costs
• Employment Allowance: Rising from £5,000 to £10,500, offering some relief to small businesses