From April 2025, taking on a full-time employee on minimum wage will cost you £2,583 more a year than it did last year. Pauses for a sharp intake of breath.
With a double whammy of a sharp rise in employer National Insurance contributions and an increase in the minimum wage, your wage bill is about to look… distressing.

According to the Centre for Policy Studies (CPS), employer NICs are going up by a whopping 60 %. If you’re running a lean team—or just managing a tight budget—this kind of jump isn’t something you can shrug off.

 

NI Changes: The New Numbers

In 2024, employers paid £1,617 in NICs for each full-time worker on minimum wage.
From April 2025, that figure jumps to £2,583.
Weekly, you’re going from paying £31 to £50 in NICs per employee.

Let’s translate that into something tangible: if you employ ten staff on minimum wage, that’s an extra £25,830 a year. Not exactly pocket money.
The total annual cost per employee? £24,806—and that’s before you factor in training, equipment, holiday cover or the odd lunch for morale.

“But They’re Earning More Too, Right?”

Yes—but not by much once the taxman’s had his cut.

A full-time minimum wage worker in 2024 earned £20,821 and paid £1,650 in income tax. From April, they’ll earn £22,222, a £1,401 increase.
Sounds good on paper.

But… income tax also rises by 17 %, from £1,650 to £1,930. NICs go up from £659 to £771.
In real terms, they’ll take home £19,521, up from £19,171. That’s a £350 bump—hardly life-changing, and certainly not what you’d expect from a £1,400 pay rise.

NI Changes and Your Hiring Plans

Lots of organisations are already calling this “one of the most damaging tax rises in British history.” If you were thinking about hiring, expanding, or reinvesting in your business this year, it’s easy to see why so many are hitting pause.

Add the government’s decision to lower the threshold of employer NICs to £5,000, and you’re staring at another £966 cost per employee.

 

Government Says: Don’t Panic

Rachel Reeves insists this is a “once-in-a-parliament reset.” In other words: yes, it hurts, but it’s not happening again any time soon.

She’s also pointed to an increase in the Employment Allowance to £10,000—giving around a million small businesses a bit of breathing room. If you’re a smaller organisation, you could end up paying the same as you did before. Could.

Naturally, not everyone’s convinced. A survey by investment firm AJ Bell found 83 % of respondents don’t believe the government’s promise not to raise taxes again. If you’ve run a business in the last five years, you probably understand that scepticism.

Your Next Move

For employers—especially those in retail, hospitality or care, where minimum-wage jobs are the backbone of operations—it’s time to get strategic:

  • Reassess staffing models: Smarter scheduling or streamlined roles can soften the blow.
  • Max out the Employment Allowance if you qualify.
  • Boost productivity through training and tech, without burning out your team.

These NI changes aren’t just another tax tweak; they mark a fundamental shift in the cost of employing people. Adjust now, or the maths might start working against you. You can schedule an appointment to find out how to navigate these changes as a franchise owner.