National Living Wage Update 2025: What Business Owners Need to Know

As your trusted Bookkeeper, I am here to keep you up to date on the National Living Wage (NLW) and National Minimum Wage (NMW) changes coming in April 2025, as announced in the latest UK budget. Understanding these updates is key to staying compliant and budgeting for potential increases in labour costs.

Key 2025 Wage Updates

From April 2025, the new rates will be: 

• Ages 23 and over: £12.21 per hour
• Ages 21 to 22: £12.21 per hour
• Ages 18 to 20: £10.00 per hour
• Under 18 and apprentices: £7.55 per hour

These adjustments are intended to help workers manage rising living costs but will increase payroll expenses. Here is how to prepare.

Managing These Changes in Your Business

*    Update Payroll Systems: Before April 2025, I will ensure that your payroll software is updated to reflect the new rates.

*    Budget Adjustments: I will work with you to update your wage budgets, as well as calculate the impacts on your National Insurance Contributions (NICs) and pension contributions.

*    Employee Communication: If you have staff directly impacted by these changes, clear communication can help them understand what to expect and shows that you are proactive about fair pay.

These changes can have a significant impact, but I am here to help you manage the transition smoothly and efficiently. Let’s start preparing early so that your business stays compliant without unexpected budget strains.

For further details, please refer to GOV.UK or feel free to reach out with any questions.

Payroll Forms – Which Form and When to Use It

If you are running your own payroll, there are quite a few payroll forms you need to be aware of to ensure tax compliance.

Payslip

An employer must provide an employee with a payslip each payday, and it must show:

• Earnings before and after deductions
• The amount of any deductions, such as tax, National Insurance, and other relevant payroll deductions, as these may change each time a payment is made.
• The number of hours worked, if pay varies depending on the time worked.

P11D Form

Form P11D is used if an employee received any taxable benefits in kind, such as a company car, interest-free loans, or medical insurance, during the year. This form summarizes all the benefits in kind received during the tax year.

• P11D forms must be provided to the employee by 6 July following the end of the tax year (5 April).

P60 Form

The P60 is a summary of an employee’s payslips for the year. It shows the total pay, and the total tax and National Insurance taken from it.

• P60 forms must be given to an employee by 31 May after the end of the tax year (5 April).
• The only circumstance where an employer is not required to issue a P60 is if the employee left employment during the tax year. This is because all the necessary information would have been included on a P45.

P45 Form

A P45 must be issued when an employee has left the company. This document shows how much tax has been paid so far in the tax year (6th April to 5th April).

Starter Checklist

If a new member of staff cannot provide a P45 from a previous job, they will have to complete a Starter Checklist. This form will allow the employer to work out an appropriate tax code to use when paying the new employee for the first time.

If you are unsure about running your own payroll, or it’s just not your thing, book a discovery call to see how I can help with payroll management.

What can an employee claim whilst on jury service

As an employee it’s important to note that your employer is not required to pay your wages whilst you are on jury service.

If your employer has chosen not to pay you whilst you are on jury service, you can claim a loss of earnings allowance from the court. To do this your employer will need to complete a “loss of earnings form” (https://bit.ly/JuryServiceClaim) and you will need to take it with you on your first day of jury service.

How much you can claim to cover loss of earnings and care or childcare costs outside of your usual arrangements, depends on the length of your jury service and how many hours you spend at court each day:

• The amount starts at £32.47 per day if you are at court up to 4 hours or less, and then £64.95 if you are at court over four hours,
• £5.71 per day for food and drink up to 10 hours, over 10 hours a day you can claim £12.17 per day,
• the cost of travel to and from court.

If your jury service lasts longer than 10 working days, the amount you can claim increases up to:

• £129.91 a day if you spend more than 4 hours at court,
• £64.95 a day if you spend 4 hours or less at court.

 You will be advised how to claim expenses after your jury service has ended.

 Your employer must allow you time off for jury service. However, if your absence would seriously harm the business, your employer will need to provide you with a letter explaining why.  Jury service can only be delayed once in a 12-month period, so if you were called up again in that period you would have to attend.

Note If you are self-employed, you can obtain insurance cover for jury service.