Rachel Reeves’ 2024 budget for ‘working people’ has introduced substantial changes for both employers and employees. Notably there are adjustments to The National Minimum Wage, Employer National Insurance and Employment Allowance all of which we have summarised below.
Please keep in mind that NannyPaye offers its hard working families and nannies options to mitigate some of the NIC increases, meaning from April 2025 a family and nanny can save £178.20/£95.04 respectively on a salary of £30,000, just by using our service compared to other providers.
Increase to National Minimum Wage
The National Minimum Wage will increase to £12.21 gross for employees aged 21 and over, which is also applicable to live-in employees. For live-in employees, the accommodation offset daily rate has increased to £10.66 per day (this is the amount that can be deducted from employees’ pay to account for the provision of accommodation, food, etc.). For employees aged 18-20 the hourly rate has risen to £10.00 per hour gross.
For those who employ a nanny on a shared basis this is very important to bear in mind, as contractually you must ensure that your nanny is being paid the minimum wage for the hours that they are employed with each family.
Increase to Employer National Insurance
The rate of Employer National Insurance will increase from 13.8% to 15%, along with the amount exempt from paying this tax dropping from £9100 to £5000 per annum. This will in many cases lead to increases in the total cost that employers pay each month, as illustrated here for a nanny that earns £30,000 gross per annum:
Current Budget | New Budget | |
|---|---|---|
Gross Pay | £2500.00 | £2500.00 |
Employee Pension | £79.20 | £79.20 |
Employee NI | £116.16 | £116.16 |
PAYE Tax | £290.20 | £290.20 |
Net Pay | £2014.44 | £2014.44 |
Employer Pension | £59.40 | £59.40 |
Employer NI | £240.40 | £312.50 |
Total Cost to Employer | £2799.80 | £2871.90 |
*Assuming a 1257L Tax Code and relief at source (standard) pension set up
Please don’t hesitate to contact NannyPaye for an illustration of your potential costs from April onwards.
Employment Allowance
Currently, this allowance offsets the first £5000 of Employer NI accrued in each tax year, rising to £10,500 per annum from April 2025.
Employment Allowance is frustratingly not available to employers of nannies, but is applicable to employers of care and support workers with the guidelines for their classification found below:
Gov.uk | Employers of care and support workers and Employment Allowance: further employer guidance
If you believe that you qualify for Employment Allowance, then let us know in writing and we will apply it to your payroll. Employment allowance claims can be backdated up to 4 years.
NannyPaye will continue to review all published guidance in the coming weeks and months to provide any further relevant information allowing us to best support and continue the work we do for you.