To help you keep on top of the changes for 2025/2026 we have listed them below, so you can see what your employees must be paid and in what circumstances.
Those with access to rradarstation can review our article on the statutory pay rates for 2025/26 here.
HMRC: advisory fuel rates - 1 March 2025 – updating next on 1 June 2025
Business mileage is the distance an employee travels for work, business mileage does not include regular commutes or private trips. Employees can be reimbursed for fuel used for business travel.
National Minimum Wage (NMW) - 1 April 2025
The NMW goes up every year from 1 April. Your employees’ pay must be adjusted accordingly as you are legally required to pay your employees the NMW. The amount you must pay depends on the employee’s age and whether they are an apprentice.
The National Living Wage must be paid to employees who are 21 or over.
The NMW must be paid to employees who are compulsory school leaving age.
Tax thresholds, rates and codes – 6 April 2025
The amount of Income Tax you deduct from your employees’ earnings depends on their tax code and how much of their taxable income is above their Personal Allowance.
Class 1 National Insurance thresholds - 6 April 2025
National Insurance contributions are a tax on earnings, which is used to fund certain benefits. Employees’ National Insurance contributions are made up of deductions from their wages and payments from employers.
Class 1A National Insurance: expenses and benefits - 6 April 2025
You must pay Class 1A National Insurance on work benefits you give to your employees, for example a company mobile phone. You report and pay Class 1A on expenses and benefits at the end of each tax year.
Class 1A National Insurance: termination awards and sporting testimonial payments - 6 April 2025
Class 1A National Insurance contributions are due on both:
- termination awards paid to employees that are over £30,000
- sporting testimonial payments paid by independent committees which are over £100,000.
- you report and pay Class 1A on these types of payments during the tax year as part of your payroll.
Class 1B National Insurance: PAYE Settlement Agreements (PSAs) - 6 April 2025
A PAYE Settlement Agreement (PSA) allows you to make one annual payment to cover all the tax and National Insurance due on minor, irregular or impracticable expenses and benefits for your employees.
The following are some examples of expenses and benefits that you might use a PSA for:
- incentive awards, such as long service awards
- telephone bills
- staff entertainment, such as staff parties and tickets to an event
- non-business expenses while travelling overnight on business that are over daily limits
- small gifts and vouchers
This list is not exhaustive.
Some employee expenses are tax-exempt, which means you don’t need a PSA and you don’t have to include them in your end-of-year reports.
Statutory Maternity, Paternity, Adoption, Shared Parental and Parental Bereavement Pay – 6 April
From the 6 April 2025, the rates for statutory family– related pay (i.e. maternity, paternity, adoption, shared parental, parental bereavement) will increase.
Shared Parental Leave – Shared Parental Leave is when employees take time off work following the birth or adoption of a child. This leave allows mothers to end their maternity/adoption leave early so one or both parents can take a period (or periods) of leave during the child’s first year in a more flexible way. Eligible employees may also be entitled to Statutory Shared Parental Pay.
- paternity leave and pay – paternity leave is when an employee takes time off work to support their partner when having a baby (including via surrogacy) or adopting
- adoption leave and pay – eligible employees are entitled to 52 weeks’ adoption leave and Statutory Adoption Pay
- maternity leave and pay – eligible employees are entitled to 52 weeks’ maternity leave and 39 weeks’ Statutory Maternity Pay
- parental bereavement – parental bereavement is when someone’s child who is under 18 dies, or if their child is stillborn. Eligible employees are entitled to paid time off work if this happens
The Neonatal Care (Leave and Pay) – 6 April 2025.
– The Neonatal Care (Leave and Pay) Act 2023 came into effect on 6 April 2025. The act aims to:
- support parents with a baby receiving neonatal care
- protect the leave and pay rights of those who have neonatal babies
- enable parents to spend dedicated time with their baby while in medical care, without using up other parental leave
Statutory Sick Pay (SSP) - 6 April 2025
Employees who are too ill to work are entitled to SSP, providing they meet the eligibility criteria. Your company may offer enhanced, contractual sick pay on top of this.
From April 6, 2025, employees can get £118.75 per week SSP if they are too ill to work. The first 3 days of an absence are known as waiting days and are unpaid. This applies to all types of illness.
Employee vehicles: mileage allowance payments - 6 April 2025
Mileage allowance payments are what you pay your employees for using their own vehicle for business journeys. You can pay your employees an approved amount of mileage allowance payments each year without having to report them to HMRC. To work out the approved amount, multiply your employee’s business travel miles for the year by the rate per mile for their vehicle.
Employment Allowance - 6 April 2025
Eligible employers can reduce their annual National Insurance liability by claiming Employment Allowance. In the tax year 2025/2026, eligible employers can reduce their Class 1 National Insurance liability by a maximum of £10,500.
Apprenticeship Levy - 6 April 2025
The Apprenticeship Levy is a tax on employers used to fund apprenticeship training. It is stored in a fund that can be accessed to help pay for apprenticeship training costs.
From April 6, 2025, the Apprenticeship Levy is paid at a rate of 0.5% of your annual pay bill. The Apprenticeship Levy allowance is £15,000.
Your annual pay bill is all payments to employees that is subject to National Insurance contributions, such as wages, bonuses and commissions.
Statutory redundancy pay - 6 April 2025
When you have finished consulting and you have decided which roles are redundant, you must give staff notice, agree a leaving date and confirm what money they are owed.
Statutory redundancy pay is given in addition to the employee’s notice pay and any payments in lieu of annual leave they are owed up to the date of redundancy dismissal.
Compensatory and basic awards for unfair dismissal - 6 April 2025
From 6 April 2025 the maximum amount of compensation an employment tribunal can award a claimant in an unfair dismissal claim has increased in England and Wales and Northern Ireland
Statutory lay-off pay – 6 April 2025
You can ask employees to stay at home or take unpaid leave if there’s not enough work for them. However, this must be stated in their employment contracts.
Student loan and postgraduate loan recovery
If your employees’ earnings are above the earnings threshold, record their student loan and postgraduate loan deductions in your payroll software. It will automatically calculate and deduct repayments from their pay.
We have also created a downloadable checklist to help you apply the changes to your business. Those with access to rradarstatioin can request a downloadable checklist by contacting us here.
Need advice?
Need advice on anything mentioned in this article, or would like access to rradarstation?Contact our team today by calling 03300 414 996 or emailing hello@rradar.com.