Payroll experts unpack the 2025 Spring Statement

The Chancellor, Rachel Reeves, unveiled the first Spring Statement of the new Labour Government, detailing that their mission is to kickstart economic growth.

Following the 2025 Spring Statement, we assembled a dream team of payroll experts (Katie Linstead, Senior Product Manager at IRIS, Fran Williams, Senior Director of Product at IRIS and Jacqui Roberts, Employment Tax Director at BDO UK LLP) to break down some of the major changes and advise on the implications.

Here I’ve summarised the discussion from our experts, pulling together their key points.

Highlights from the 2025 Spring Statement 

This year’s Spring Statement was relatively quiet from a payroll perspective, with the larger focus being on compliance.

There was a greater focus on stability and planning rather than immediate changes.

The Chancellor kept her promise of avoiding further tax changes, but tax evasion is firmly back in the spotlight.

Tackling tax avoidance

The statement highlighted a focus on tackling the promoters of tax avoidance, detailing their commitment to closing down loopholes.

The crackdown is likely to be on those more ‘complex’ arrangements that usually involve a promoter or third-party plus the employers –  this may include things like umbrella companies or loans using employee benefit trusts. 

However, straightforward non-compliance will also be targeted.

In the statement, there was also a focus on technology and the better use of new and improved third-party data.

An area of note is HMRC’s strategic focus on tackling the tax gap; plans are in place to recruit 500 new compliance officers on top of the thousands already promised in the Autumn budget.

Autumn Budget  recap 

As the Autumn Budget saw far more implications for payroll professionals and businesses, I thought it’d be useful to quickly recap.

More content: What does the 2024 Autumn Budget mean for businesses

Read here

National Minimum Wage (NMW) increases  

In the Autumn Budget, the Chancellor announced significant increases in the National Minimum Wage.

Since April 2025, the over-21s rate increased from £11.44 to £12.21, which was a 6.7% hike. 

The 18-20s rate saw the biggest increase ever, going from £8.60 to £10, which was a 16.3% increase.  

For those aged 16-17 and apprenticeships, the increases went from £6.40 to £7.55.

These new NMW rates represent a substantial cost for employers with a larger number of low-paid workers.

Employer National Insurance Contributions (NIC) increase 

The Employer National Insurance Contributions increase was perhaps the big hit from the Autumn Budget, with the Chancellor announcing a 1.2% increase, taking the rate from 13.8% to 15%.

The Secondary Threshold was also lowered from £9,100 to £5,000, meaning employers will start paying ER NICs on many more workers than before.

Together with the uplift in NMW, these changes represent a significant rise in costs for employers, requiring many to adapt.

Employment allowance increase

Finally, the Employment Allowance also increased in April, going from £5,000 to £10,000.

The £100,000 previous year NI liability limit has also been removed, opening up the allowance to more employers.

The limit on one allowance per group of companies remains; if Employers are unsure if their businesses represent a linked group, they should contact HMRC for clarification.

Watch the webinar: 2025 Spring Statement Breakdown

If you’re looking for further guidance, be sure to watch the full webinar!

In the webinar, our speakers cover:

• The Spring Statement
• HMRC nudge letters
• Autumn Budget recap
• Tronc periods and holiday pay
• Tipping legislation

Watch the webinar: 2025 Spring Budget Breakdown

Click here