Companies that employ the National Living Lage (NLW) are deleted for cost increases of more than £ 2,100 per employee from April 2025, according to leading tax, audit and business consultancy Blick Rothenberg.
The rise follows simultaneous walks in the NLW and National Insurance Contributions (NIC).
Matt Crawford, a partner at Blick Rothenberg, says that employers with the NLW would rise from £ 11.44 to £ 12.21 per hour from £ 11.44 to £ 12.21 per hour. That is an extra £ 700 extra in NIC per employee, which reflects the latest budget changes from the Chancellor. “We know various employers who already repeated repeated recruitment plans or back payments for those slightly above the NLW when they balance their books,” adds Crawford.
Large companies with a considerable number of lower, informal employees-in particular in the retail trade, hospitality and transporting probably feel the largest presses. Smaller companies, however, receive a partial pillow through the ’employment allowance’ from the employer, which will double from £ 5,000 to £ 10,500. Although that reduces a few NIC reasons for small companies, they still have to meet the same minimum wage requirements as larger employers.
In an attempt to manage overhead costs, companies are increasingly investigating salary sacrificial schemes, in which employees effectively trade part of their salary for NIC-efficient benefits such as extra pension contributions or electric vehicles. But “these schemes do not help the lowest paid staff,” says Crawford, because the law requires that their gross salary remains above the national minimum wage.
The result for many companies with large pools of lower -paid staff is a reluctance to recruit or an introduction of overtime restrictions, warns Crawford. “These higher costs can encourage some employers to insert extension or reduce investments to stay within budgets,” he says, suggesting that the new measures can have a ripple effect in several sectors when they come into force in April 2025.