Spring Statement 2025: Employment Taxes

In today’s Spring Statement, the Chancellor confirmed no new changes beyond those announced in the Autumn Budget, which highlighted key updates to wages, National Insurance, Income Tax, payrolling of benefits and electric vehicles. 

National Minimum and Living Wage Increases 

• National Living Wage (NLW): The NLW for workers aged 21+ will rise to £12.21 per hour, a 6.7% increase. 
• National Minimum Wage (NMW): For those aged 18-20, the NMW will increase to £10 per hour, a 16.3% rise. 
• Apprentice Rate: Apprentices will see an 18% increase, raising the rate to £7.55 per hour. 

These increases are part of the Government’s long-term goal to harmonise wage rates. 

National Insurance Contributions (NICs) 

The employee NIC rate will remain at 8%, but the employer NIC rate will rise to 15% in April 2025. The threshold for employers to pay NICs will drop from £9,100 to £5,000. To support small businesses, the Employment Allowance will increase from £5,000 to £10,500. 

Income Tax and Thresholds 

The current Income Tax thresholds will remain frozen until April 2028. After that, the thresholds will be adjusted in line with inflation to help workers’ earnings keep pace with rising costs. 

Payrolling of Benefits 

The Government is proceeding with plans to make Payrolling of Benefits mandatory from April 2026. This change aims to simplify the process for reporting and taxing employee benefits, ensuring a more streamlined approach to payrolling across the country. 

Electric Vehicle Tax Relief 

The Benefit in Kind (BIK) rate for electric vehicles will remain at 2% for the 2025-2026 tax year, encouraging the adoption of zero-emission cars. However, the BIK rate will rise by 2 percentage points per year in 2028-2030. 

Conclusion 

The Spring Statement confirmed no new changes from the Autumn Budget, reinforcing measures aimed at supporting workers, businesses, and the environment. 

Read the full Spring Statement Guide

While there were no new policy announcements in today’s Spring Statement, we revisit the important changes from the 2024 Budget, covering Making Tax Digital and a summary of the key consultations including advanced clearances, reform of behavioural penalties and a comprehensive package of measures to close in on promoters of marketed tax avoidance schemes. Read more here.