Legal Update: changes to minimum wage, statutory pay and National Insurance Contributions

As we move into April, several significant legislative changes are set to take effect in the UK which will impact workers and employers alike. Here's an overview of the key changes we’re expecting to see, and how they’ll affect you and your teams:  

National Minimum Wage Increase 

Effective from 1 April 2025, both the National Minimum Wage and National Living Wage will rise by 6.7%, providing approximately three million workers with an annual pay increase of £1,400. There’s also a new rate for the amount for provision of living accommodation (the “accommodation offset”) which will apply to pay reference periods starting on, or after, 1 April 2025. 

The new rates are as follows: 

• The National Living Wage for those aged 21 and over will rise from £11.44 per 

• hour to £12.21 per hour. 

• The National Minimum Wage for 18–20-year-olds rises from £8.60 to £10 per 

• hour. 

• The apprenticeship rate, and for 16–17-year-olds rises from £6.40 per hour to 

• £7.55 per hour. 

• The accommodation offset will rise from £9.99 per week to £10.66 per week. 

New right to neonatal care leave  

Neonatal care leave and pay will be available for new parents who are responsible for a child born on or after 6 April 2025 that requires neonatal care. 

• Eligible employees will be entitled to take statutory neonatal care leave from day one of their employment so this change will affect every employer, regardless of size of the organisation. 

• Employees will be able to take one week of neonatal care leave for each consecutive seven-day period that the child is receiving neonatal care, up to a maximum of 12 weeks. 

• Neonatal care leave can be used in addition to other forms of statutory family leave such as maternity leave, paternity leave and adoption leave. 

• Employees will also be entitled to a maximum 12 weeks of Statutory Neonatal Care Pay, subject to eligibility criteria. 

Increased statutory rates of pay  

The Government has announced increases to the weekly rates of several types of statutory pay for 2025/26. The following types of statutory pay will increase from £184.03 to £187.18 per week: 

• maternity pay 

• adoption pay 

• paternity pay 

• shared parental pay 

• parental bereavement pay 

Statutory Sick Pay will also increase from £116.75 to £118.75 per week. 

Increased National Insurance Contributions 

In the autumn Budget, the Government announced that it will be introducing legislation to increase the main rate of secondary Class 1 National Insurance contributions (NICs) from 13.8% to 15%. The Class 1A and Class 1B employer rates will also increase in line with this, starting on 6 April 2025. 

Legislation will also be introduced to reduce the Class 1 NICs secondary threshold, from £9100 to £5000 per annum. This will take effect from 6 April 2025–5 April 2028. Thereafter, the secondary Class 1 NICs threshold will be increased in line with the Consumer Price Index. 

In an effort to support small businesses with these changes, the Government is increasing the employment allowance from £5000 to £10,500 and removing the £100,000 threshold, so the allowance is not restricted to employers whose NI bill in the previous tax year was £100,000 or less. This will take effect from April 2025 and will mean eligible employers will be able to reduce their NIC liabilities by up to £10,500 per year. 

If you’d like advice or assistance implementing any of these changes or understanding how they affect your team, Ambition HR is here to help. If you feel like you’d benefit from an informal chat about your business needs, you can schedule a call online today.