How your charity’s payroll was affected by the new tax year

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With the 2025/26 tax year now underway, it’s time for charities to prepare for new payroll regulations.

Managing payroll has always been a time-consuming and complex task – and now more than ever, charities need to stay informed and adjust their payroll systems accordingly to remain compliant.

Here’s what you need to know about the changes and what to do to ensure your organisation thrives throughout 2025.

New National Minimum Wage and Employer National Insurance contribution rates

National Minimum Wage (NMW) rates increased on 1 April 2025:

  • The National Living Wage (age 21 and over) rose from £11.44 to £12.21 per hour, marking an increase of 6.7 per cent.
  • For workers aged 18 to 20, the NMW increased from £8.60 to £10.00 per hour – a 16.3 per cent rise.
  • For employees under 18 and apprentices, rates rose by a significant 18 per cent, from £6.40 to £7.55 per hour.

Changes to employer National Insurance Contributions (NICs) also came into effect on 6 April 2025:

  • The standard rate for employer NICs increased to 15 per cent.
  • The threshold at which employers begin paying NICs dropped from £9,100 to £5,000 per annum.

If you haven’t already done so, your charity will need to factor these increased employment costs into your financial planning and budgeting.

Changes to statutory pay rates

Statutory pay rates also rose from 6 April 2025.

The weekly rates for Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP), Statutory Shared Parental Pay (ShPP), and Statutory Parental Bereavement Pay (SPBP) increased from £184.03 to £187.18.

Statutory Sick Pay (SSP) rose from £116.75 to £118.75 per week.

The earnings threshold for these payments increased from £123 to £125 per week.

April also marked the introduction of Statutory Neonatal Pay (SNP), available to eligible employees at £187.18 per week or 90 per cent of their normal weekly earnings (whichever is lower).

You should ensure that employees have been informed about these updates to statutory pay.

Changes to Employment Allowance

While the increases to pay and NICs present a challenge, there has been positive news for the charity sector.

From 6 April 2025:

  • The maximum annual Employment Allowance doubled from £5,000 to £10,500.
  • The £100,000 NIC liability cap – which previously prevented some employers from claiming – was scrapped.

These changes open up the Employment Allowance to a wider range of charities and businesses.

If your charity hasn’t claimed it before, now is a good time to check whether you’re newly eligible.

Final thoughts

Charities must act swiftly to stay ahead of payroll changes in 2025.

At Milsted Langdon, we understand the pressure of adapting to changing regulations while continuing the vital work of your organisation.

Our team of charity and not-for-profit specialists are here to support you with budgeting, compliance, and long-term sustainability.

We’ll ensure your accounts are in order – so you can focus on what matters most: helping others.

Contact our charity team today for tailored support and advice.

Posted in Blog, Charities, Charities, Payroll.