Posted by tinamitchell - March 5, 2025 4:22 pm
Payroll – New Tax Rates and Information for April 2025
National Minimum Wage/Living Wage Rates
| From April 2025 | From April 2024 | Increase % | |
| National Living Wage (Age 21 and over) | £12.21 | £11.44 | 6.7 |
| 18-20 Year Old Rate | £10.00 | £8.60 | 16.3 |
| 16-17 Year Old Rate | £7.55 | £6.40 | 17.9 |
| Apprentice Rate* | £7.55 | £6.40 | 17.9 |
| Accommodation Offset (Daily) | £10.66 | £9.99 | 6.7 |
*Apprentices are entitled to the NMW rate, if they are aged over 19 and have completed the first year of their apprenticeship.
Personal Allowance and Tax Bands
(For England and Northern Ireland)
| Tax Band | 2025-26 rates | 2024-25 rates |
| Personal Allowance (0%) The allowance before you pay any income tax. | Up to £12,570 | Up to £12,570 |
| Basic Rate (20%) | £12,570 – £50,270 | £12,570 – £50,270 |
| Higher Rate (40%) | £50,271 – £125,140 | £50,271 – £125,140 |
| Additional Rate (45%) | £125,141 | £125,141 |
Please also note that earning of over £100,000 will see a decrease in the personal allowance of £1 for every £2 that the income exceeds that threshold and once taxable income exceeding £125,140 the personal allowance is removed.
National Insurance Contributions (NICs)
Class 1 (Primary) National Insurance thresholds for employees:
| 2025/26 Weekly Threshold | 2025/26 Annual Threshold | 2024/25 Weekly Threshold | 2024/25 Annual Threshold | |
| Lower Earnings Limit (LEL) | £125 | £6,500 | £123 | £6,396 |
| Primary Threshold (PT) | £242 | £12,570 | £242 | £12,570 |
| Upper Earnings Limit (UEL) | £967 | £50,270 | £967 | £50,270 |
| Earnings above the Upper Earnings Limit | £968 and above | £50,271 and above | £968 and above | £50,271 and above |
| Employment Allowance (per employer unless you are a connected company and only if you qualify) | £10,500 per year | £5,000 per year | ||
*The rate at which employees pay NIC is 8% on earnings up to the Upper Earnings Limit and 2% on earnings over the Upper Earnings Limit.
Class 1 (Secondary) National Insurance thresholds and rates for employers
| 2025/26 Weekly Threshold | 2025/26 Annual Threshold | 2024/25 Weekly Threshold | 2024/25 Annual Threshold | |
| Secondary Threshold: On salary payments above this threshold employers make NI contributions at a rate of 15% from 2025-26 (13.8% prior to 2025-26) | £96 | £5,000 | £175 | £9,100 |
The Employment Allowance will increase from £5,000 to £10,500 and the current £100,000 threshold for eligibility will be removed.
The Veteran NI relief scheme has been extended for another year and applies for the first 12 months from the first day of civilian employment.
Dividend Tax rates
There are no changes to the Dividend Tax rates since last April. The Dividend Allowance remains at £500 for 2025/26.
| Basic rate taxpayers | 8.75% |
| High rate taxpayers | 33.75% |
| Additional rate taxpayers | 39.35% |
Pension Contributions
Minimum contributions are not increasing for Automatic enrolment and re-enrolment pensions for April 2025 and the trigger point for re-enrolment will also remain at £10,000 per annum. There are changes expected to be introduced to lower the auto enrolment age and removal of the lower level, however guidance of these changes and details of when these changes will come into effect have not yet been released.
| 2025/26 | 2024/25 | |
| Employers minimum contributions | 3% | 3% |
| Total contributions | 8% | 8% |
| Lifetime Allowance (LA) | Abolished | Abolished |
| Annual Allowance limit | £60,000 | £60,000 |
| Money Purchase Annual Allowance | £10,000 | £10,000 |
If you are not using qualifying earnings or use one of the set tiers, please see the guidance of the Pension Regulator or speak to your pension provider for further advice.
Statutory Maternity, Paternity, Adoption, Shared Parental Pay, Bereavement Leave Pay, Neonatal Care Pay and Sick Pay
| 2025/26 | 2024/25 | |||
| Statutory Maternity Pay | ||||
| SMP – first 6 weeks | 90% of AWE | 90% of AWE | ||
| SMP – remaining weeks | £187.18 or 90% of AWE (whichever is lower) | £184.03 or 90% of AWE (whichever is lower) | ||
| Statutory Paternity Pay | ||||
| SPP – either one or two weeks | £187.18 or 90% of AWE (whichever is lower) | £184.03 or 90% of AWE (whichever is lower) | ||
| Statutory Adoption Pay | ||||
| SAP – first 6 weeks | 90% of AWE | 90% of AWE | ||
| SAP – remaining weeks | £187.18 or 90% of AWE (whichever is lower) | £184.03 or 90% of AWE (whichever is lower) | ||
| Statutory Shared Parental Pay | ||||
| ShPP – weekly rate | £187.18 or 90% of AWE (whichever is lower) | £184.03 or 90% of AWE (whichever is lower) | ||
| Statutory Bereavement Leave Pay | ||||
| SPBP – weekly rate | £187.18 or 90% of AWE (whichever is lower) | £184.03 or 90% of AWE (whichever is lower) | ||
| Statutory Neonatal Care Pay | ||||
| SNCP – weekly rate | £187.18 or 90% of AWE (whichever is lower) | N/A | ||
| Statutory Sick Pay | ||||
| SSP – weekly rate | £118.75 | £116.75 | ||
As an employer, you will be able to reclaim 92% of the statutory payments (except for SSP) if your total Class 1 NI (employees and employers) is above £45,000 in the previous year. If your Class 1 NI is below £45,000, you will be able to reclaim 108.5%.
Student Loan and Postgraduate Loan recovery
| Type of student loan | 2025/26 | 2024/25 | ||
| Annual threshold | Rate | Annual threshold | Rate | |
| Plan 1 (England and Wales) | £26,065 | 9% | £24,990 | 9% |
| Plan 2 (England and Wales) | £28,470 | 9% | £27,295 | 9% |
| Postgraduate (England and Wales) | £21,000 | 6% | £21,000 | 6% |
| Plan 4 (Scotland) | £32,745 | 9% | £31,395 | 9% |
| Plan 5 (England only) | N/A | To commence from April 2026 | N/A | N/A |
Apprenticeship Levy
Employers and connected companies with a total annual pay bill of more than £3 million, are liable to the Apprenticeship Levy, which is payable monthly. Employers who are not connected to another company or charity will have an annual allowance that reduces the amount of Apprenticeship Levy you have to pay. The Levy is charged at a percentage of your annual pay bill.
| Allowance / Charge | 2025/26 | 2024/25 |
| Apprenticeship Levy Allowance | £15,000 | £15,000 |
| Apprenticeship Levy Charge | 0.5% | 0.5% |
For further information, please speak to a member of our payroll teams or to your usual MFW contact.
