As the end of the current 2024/2025 Tax Year approaches, you may wonder how changes for the financial year 25/26 will affect both current and future Employers & Employees.
To help you with this, we are sharing the key headlines that employers & Nannies in the UK will need to be aware of.
Changes to Employer’s National Insurance Contributions
National Insurance contributions will increase from 13.8% to 15%. This means that the total cost of employing household staff will increase.
The threshold at which employers are liable to pay National Insurance (the Secondary Threshold) will reduce from the 6th April 2025 to £5,000 per year.
National Minimum Wage will increase from £11.44 to £12.21. (GROSS) per hour
For those employing live in Nannies it may be wise to check that your employee’s hourly rate is above the National Minimum Wage.
Accommodation Offset Allowance increase:
If an employee is living with the employer and they are operating the Accommodation Offset Allowance, employers will now be able to offset £10.66 each day (from £9.99) and £74.62 for the week (from £69.93).
The personal Income Tax allowance threshold for 2025/26 has been frozen at the limit of £12,570.
Employee’s will only pay income tax on any earnings which are above the £12,570 threshold, however, this is dependent on their individual tax code.
Statutory Rates Increase:
SMP & SPP
The first six weeks of Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) remain the same. The statutory weekly rate for the remaining 33 weeks will increase to £187.18 or 90% of the employee’s average weekly earnings, whichever is lower.
Statutory Paternity Pay (SPP), Statutory Shared Parental Pay (SPP) and Statutory Parental Bereavement Pay (SPBP) will all share the same weekly rate of £187.18 or 90% of the employee’s average weekly earnings, whichever is lower.
SSP
The weekly rate for Statutory Sick Pay (SSP) will increase from £116.75 to £118.75.
Benefits in Kind:
If an employee is receiving any taxable benefits, they need to submit this information to HMRC. For example, if the Nanny uses their employer’s car for personal use (which includes commuting), this would be classed as a taxable benefit.
