Employers will face higher costs from April as increases in the minimum wage and National Insurance (NI) take effect. Analysis by the Centre for Policy Studies (CPS) reveals that a full-time employee on minimum wage will cost businesses £2,583 more per year.
In 2024, businesses paid £1,617 in NI for each minimum wage worker. This will jump by over £900 in 2025 – a 60% increase. Weekly NI contributions will rise from £31 to £50.
A full-time minimum-wage worker earned £20,821 in 2024, paying £1,650 in income tax. From April, their salary will increase by £1,401 to £22,222. However, income tax on this will rise by 17%, costing them £1,930. After tax, they will take home £20,292 – £1,121 more than in 2024.
Employee National Insurance will also rise, increasing from £659 to £771. After income tax and NI, the worker’s net pay will be £19,521, up from £18,512.
The total cost of employing one minimum wage worker will hit £24,806 a year. This includes higher wage bills, NI contributions, and lowering the NI threshold to £5,000, adding an additional £966 per employee.
The CPS warns these changes could negatively impact businesses, forcing them to reconsider investment plans and hiring .
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